VCP Analysis and a Segment of the Business
The fundamental approach of applying the VCP analysis to a segment of the business is the same as applying it to the business as a whole. The VCP approach may he applied to problems relative to individual product lines, territories, methods of sale, channels of distribution or any particular segment of the business which is under security. In all these decisions, fixed costs and P/V ratio are the required inputs. Where fixed costs are inclusive of allocated costs also, in additional to direct costs, two REPs may be determined.