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What is C-V-P analysis used for? In the process of using C-V-P analysis, what does it mean to "break even"?

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Solution Summary

C-V-P analysis is discussed. Break even analysis is discussed.

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CVP is the study of the effects of output volume on revenue (sales), expenses (costs), and net income (net profit). Hence it is a management accounting tool that expresses relationship between sales volume, cost and profit.
Thus it seeks to provide answers to the following questions:
1. What sales volume is necessary to produce an X amount of operating profit.
2. What will be the operating profit or loss at X sales volume be.
3. What will be the effect on operating profit be if the ...

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