Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits no loss for the company. The benefit of relating product contribution margin to the amount of constrained resource to maximize company’s profit.

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Chapter 6, Problem 6.12Q

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits no loss for the company.

The benefit of relating product contribution margin to the amount of constrained resource to maximize company’s profit.

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