VOLUME COST PROFIT ANALYSIS

Cash Break-Even Point The VCP relationship can also be used to show the liquidity position of the firm. This is done through the computation of cash break even-point or cash break-even sales revenue (CBEP/CBESR). Algebraically: Graphically, the CBEP is determined at...
VOLUME COST PROFIT ANALYSIS

Application of the P/V Ratio 1. Determination of BEP = FC + P/V ratio 2. Determination of profile at given/budgeted sales volume = (Actual sales – BE sales) x P/V ratio. 3. Determination of sales volume to earn budgeted profit = (FC + DP) + P/V ratio. 4....
VOLUME COST PROFIT ANALYSIS

Important Points Regarding In Figure, there are two cost lines to show, which is designed to reveal the change due to the selling price has only one sales line (45°). The impact of change in the sales price is reflected indirectly in the variable cost which is line...
VOLUME COST PROFIT ANALYSIS

VCP Applications to similar other questions are available in the VCP graph. The VCP graph can be modified to show the changes in the profitability factors of Example such as, 1. Change in fixed costs (Rs 10,000 both ways) 2. Change in variable costs (20 per cent both...
VOLUME COST PROFIT ANALYSIS

Assumptions Regarding the VCP Graph Are 1. Costs can be bifurcated into variable and fixed components. 2. Fixed costs will remain constant during the relevant volume range of graph. 3. Variable cost per unit will remain constant during the relevant volume range of...