Cost Volume Profit Analysis and Costing for the 21st Century

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Cost Volume Profit Analysis and Costing for the 21st Century

Abstract
Cost value is the analysis of different divisions or business units of a firm on the basis of their opportunity cost and economic rent (“Cost value definition”). The objective of cost value is to determine which division or unit should be kept, expanded, sold, or shut down (“Cost value definition”). Cost analysis is an important component of all economic evaluation techniques, especially when it comes to planning and self-assessment. Cost value is the analysis of different divisions or business units of a firm on the basis of their opportunity cost and economic rent (“Cost value definition”). The objective of cost value is to determine which division or unit should be kept, expanded, sold, or shut down (“Cost value definition”). Cost volume profit analysis is an analysis that deals with how profits and costs change with a change in volume (“Business definition for:,”). In particular, it looks at the effects on profits of changes in such factors as variable costs, fixed costs, selling prices, volume, and mix of products sold (“Business definition for:,”).

Cost Volume Profit Analysis and Costing for the 21st Century
The purpose of this paper is to address the notion of value costing for the 21st century organizations. In order to satisfy that objective, I will begin by defining and explaining value costing. From there I will provide points as to whether or not I agree with the notion of value costing. I will then discuss situations that could be more appropriate for the application of “tried and true” costing methods of the 20th century and explain if they are industry or firm specific. Finally I will discuss cost-volume-profit analysis and discuss whether or not it is still relevant in the 21st century business organization.

Cost value is the analysis of different divisions or business units of a firm on the basis of their opportunity cost and economic rent (“Cost value...
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