Explain some of the basic assumptions of CVPanalysis and why this is used in managerialaccounting? Why do managementaccountants use sensitivity analysis andprovide an example of how this would beused (use a real publicly traded company)?

Cost volume profit analysis is an important tool used by the businessman for planning and…

Answered: -xplain son nalysis and Ccounting?

Business

Finance

-xplain son nalysis and Ccounting?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6Q: Explain how a manager can use CVP analysis to make decisions regarding changes in operations or...

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Explain some of the basic assumptions of CVP
analysis and why this is used in managerial
accounting? Why do management
accountants use sensitivity analysis and
provide an example of how this would be
used (use a real publicly traded company)?

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