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ACCT-346 Week 5 Discussion: Cost-Volume-Profit Analysis and Relevant Costs (GRADED)
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ACCT-346 Week 5 Discussion: Cost-Volume-Profit Analysis and Relevant Costs (GRADED)
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Week 5 Discussion: Cost-Volume-Profit Analysis & Relevant CostsWeek 5 Post 1
Discuss the basic assumptions of CVP analysis & how we can use CVP analysis as
managers in making decisions.
Cost-Volume-Profit analysis is the breakeven point of the business. It uses the information using
the cost & unit to provide the Break-even point, where the total revenues & the total cost comes
to 0l. Thus, the company shows there is no income & no loss.
So, it is beneficial to the manager of company to analyse the break even point using the fixed &
variable units. It helps for future budget forecasting, to analyse the spending & production as
well as increase or decrease the production depending on the break even analysis. Managers
have to be very cautious when making decisions about business financial structure because the
CVP analysis is based on the statistical models which is simple based on probabilities.
http://smallbusiness.chron.com/advantages-disadvantages-costvolumeprofit-analysis-
35135.html
Week 5 Post 2
Explain the meaning of sunk costs & opportunity costs & their roles in the
decision-making process.
The meaning of sunk cost are the cost which are incurred in the past but does not
reflect in any of the cash flows to estimate the net present value & internal rate of return.
Also they can't be recovered. In other words sunk costs are irrelevant in business.
Opportunity cost are the cost with the alternative, which are not necessarily involved in
any cash flows. But they do reflect in the cash statements.
Braun, Karen W., Wendy Tietz. Managerial Accounting, 4th Edition. Pearson Learning
Solutions, 2015-01-14. (pg 445).
Week 5 Post 3
This study source was downloaded by 100000801755870 from CourseHero.com on 04-06-2022 12:52:03 GMT -05:00
https://www.coursehero.com/file/49135783/ACCT-346-Week-5-Discussion-Cost-Volume-Profit-Analysis-and-Relevant-Costsdocx/
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