MBA Accounting

Cost-volume-profit relationships need to be understood by managers whether who have financial or non financial knowledge. This is because the cost-volume-profit relationship helps manager to make decision. It helps them to understand the interrelation between, cost, volume and profit in an organizatin by focusing interactions among the following elements:

1. Price of the product
2. Volume or level of activity
3. Per unit variable cost
4. Total fixed cost
5. Mix of product sold

The aforesaid elements would provide the managers the following answers:

• what product to manufacture or sell
• what pricing to follow
• what marketing strategy to employ
• what type of productive facilities to acquire

This entry was posted on Friday, November 2nd, 2007 at 6:07 am and is filed under 2. Cost-Volume-Profit. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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