Model of Management Accounting

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Author Note

MANAGEMENT ACCOUNTING1
Table of Contents
Introduction................................................................................................................................2
Literature Review.......................................................................................................................2
Cost Volume Profit (CVP) Analysis..........................................................................................2
A Mechanism of Economic Entity’s Managerial Control......................................................2
A Model of Indefinite Estimation for Decision-Making........................................................3
A Tool that incorporates Capital Costs..................................................................................3
CVP: Issues of Uncertain Analysis and Decision-Making........................................................3
CVP-BEP Relationships.............................................................................................................4
Conclusion..................................................................................................................................4
References..................................................................................................................................5

MANAGEMENT ACCOUNTING2
Introduction
It is an inescapable point that the resources in the present world are scarce, and it has
to be handled more effectively by the organisation’s managers. The management has to
ensure about effective utilisation of the resources that is available inside and outside the
organisation (Niu & Du, 2015). Cost volume profit (CVP) analysis is the tool that can be used
by the organisation to figure out such matters. The report aims to discuss the uses of cost-
volume-profit analysis that is one of the managerial accounting technique. Further, it
demonstrates its concerned issues related to decision-making and its relationship with Break-
Even Point (BEP) thoroughly.
Literature Review
Cost Volume Profit (CVP) Analysis
The organisations have to figure out the reason for the effect on operating
expenditures and net income because of the changes in cost and volume. CVP analysis is
used to understand certain matters to make effective decisions. It can ascertain all the costs of
organisations that are categorised into fixed and variable costs (Armean & Ardeleanu, 2017).
However, it may be difficult to analyse due to multiple products with the uneven product line
and fluctuating demand within an uncertain environment.
CVP analysis can be used as:
A Mechanism of Economic Entity’s Managerial Control
The assessment of natural resources is a tough job to find which resource requires
significant concern for the organisations. CVP analysis is an effective control mechanism in
the context to define an estimated cost, quantity and profit (Lulaj & Iseni, 2018).
Management can plan and analyse the company’s CVP activities with the help of an adequate