Cost-Volume-Profit Analysis

Cost-volume-profit (CVP) can be used to calculate the break-even point. The break-even point is the sales level at which the company does not earn a profit or loss. CVP can also be used to add in an amount of profit (target profit) in the calculation. Costs can either be fixed, variable, or mixed.

Include the following in your post:

Explain variable costs, fixed costs, and mixed costs.

What is meant by the term relevant range?

What is contribution margin and how is it calculated?

Explain the three methods: the equation approach, the contribution approach, and the contribution margin approach to calculate the break-even point.

Present a chart that depicts the four steps that are necessary to develop the CVP chart.

What is margin of safety and operating leverage?

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