CVP

Cost-Volume-Profit

CVP analysis is a fundamental managerial accounting tool widely used in sales and marketing strategies. It helps in understanding how cost, volume, and price changes impact a company’s profit. CVP analysis is crucial for making decisions about pricing, determining the break-even point, and planning sales strategies.

CVP can guide decisions on pricing products or services to maximize profit. It can also help determine the sales volume needed to achieve profitability. For marketing, understanding CVP is essential for creating effective strategies. It allows for assessing the impact of marketing campaigns on sales volume and profitability and for optimizing the marketing mix to achieve better results.

• Abbreviation: CVP