Cost-volume-profit (CVP) analysis Essay Example | Topics and Well Written Essays - 250 words

Cost-volume-profit (CVP) analysis - Essay ExampleThis research will begin with the statement that CVP depth psychology is even recognized as the cost-volume-profit analysis, which is an accounting technique that helps entrepreneurs in making a decision regarding their businesses. This essay discusses that the analysis helps entrepreneurs in identifying the breakeven halt or the point at which their sales and expenditure will be equal to each other. This, in turn, helps a new startup in identifying the number of units it should sell in order to meet the minimum expenditure and investment it had made in the business. It will help them in identifying the time period around which the business index start making profits. Identifying the time period when the business might start making a profit is essential for a new business as a new business does not start making profits as soon as it starts functioning. Identifying the time period helps businesses remain focused and diversity their s trategies accordingly to meet the profitability timeline. The present research has identified that the analysis even provides information regarding the number of goods and services that will be needed to call forth goods and services. This can be used by new entrepreneurs in reducing their future input costs of production. This even helps the entrepreneur in identifying how certain changes in the variable or the fixed cost can reduce or increase the cost of production of various goods as well as services.