Factors in a cost volume profit analysis
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Factors which should be taken into account when making decisions about price, such as any change in risk involved in the cost-volume-profit structure; the link between short- and long-run prices; and the interactions between acquisitions policy, financing decisions and pricing decisions.
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The solution discusses factors that should be taken into account when making decisions about price, such as any change in risk involved in the cost-volume-profit structure; the link between short- and long-run prices; and the interactions between acquisitions policy, financing decisions and pricing decisions.
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There are other factors which must be considered also, in addition to the factors that have been mentioned. Economic conditions are also a consideration. The CVP makes many assumptions and therefore is not ideal to be used as a stand-alone model for decision-making, including decisions about price. Management needs to take the general economic conditions into consideration when dealing with prices. If the economy has been stable, this would be an important ...
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