Cost Volume Profit Analysis and Decision-Making Techniques

This document focuses on Cost Volume Profit (CVP). Limitation and Advantages of CVP, limiting factor analysis, and contribution to sale ratio (C/S) are discussed. Organisations typically produce and sell a variety of products and services. To perform breakeven analysis in a multi-product organisation, however, a constant product sales mix must be assumed. The margin of safety for a multi-product organisation is equal to the budgeted sales in the standard mix less the breakeven sales in the standard mix. It may be expressed as a percentage of the budgeted sales.