Importance of CVPĬVP analysis is important because it assists in the following areas: Volume is the most crucial factor that affects cost. Thus, cost-volume-profit (CVP) analysis measures changes in cost in relation to changes in volume. In turn, this depends on the volume of production, which bears a relationship to the cost. Profit depends on sales, the sales price depends on the cost, and the volume of sales depends on the volume of production. These three factors of cost, volume, and profit share a connection and are interdependent. The most crucial include the manufacturing cost, the volume of sales, and the selling price of the product. Updated on SeptemCost-Volume-Profit (CVP) Analysis
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