The subject of cost-volume profit analysis under uncertainty has had extensive literature collected in recent years even though the topic has been ignored in most textbooks. In many cases, entire chapters are devoted to cost-volume profit analysis but they ignore the possibility that one or more parameters of the problem are completely random and therefore the future values are unknown at the time the decision is made. The reluctance of textbook authors to discuss stochastic CVP models can be attributed to the diversity of the literature published. Since numerous models have been proposed and examined, such as single product versus multi-product, it doesn’t really matter the model you use because it is likely to be complicated because it involves various concepts from mathematical statistics. It is a well known fact that real world decision making takes place under conditions of uncertainty and the basic cost-volume profit model helps to create a clearer picture of the variables by generalizing the model to any uncertain situation. In this paper I will present, analyze and apply a stochastic CVP model that can be used as a gateway to decision-making under uncertainty. While

the full mathematical derivations of the results shown herein are probably too complicated for most undergraduates, the results themselves are fairly straightforward, and they facilitate a precise focus on such fundamental concepts in decision-making under uncertainty as the tradeoff between expected profits and breakeven probability. There is an inevitable tradeoff between the comprehensiveness and realism of a model (which tend to generate mathematical complexity) and its practicality and ease-of-use (the extent to which it can readily provide definite answers to specific questions). The model presented here attempts to strike an appropriate balance between these two competing criteria. It is a much simpler model than many of those found in the research literature. For example, the model...

...taxes, legalities, and business related concerns should be considered. More important, how ones business can break-even or be profitable should be of utmost concern.
This paper covers break-even analysis, fixed costs, and variable factors of Snap Fitness franchise ownership.
CVPAnalysisCVPanalysis considers the relationship among volume or activity level, unit selling prices, variable cost per unit, total fixed...

...CHAPTER 1: COST VOLUME PROFIT ANALYSIS
LEARNING OBJECTIVES:
At the end of this chapter, you should be able to:
* Describe the differences between the accountant’s and the economist’s model of cost volume profit analysis.
* Apply the cost volume profit approaches in the calculation of breakeven point, margin of safety, target selling price and sales volume.
* Construct breakeven, contribution and profit volume graph.
* Apply cost volume profit...

...QUESTION
a). Name five assumptions that underline the use of break – even analysis.
It is essential that anyone preparing or interpreting CVP information is aware of the underlying assumptions on which the information has been prepared. If these assumptions are not recognized, serious errors may result and incorrect conclusions may be drawn from the analysis.(Drury, 2004).
Breakeven analysis (cost-volume-profit...

...CVP and Break-Even Analysis Paper
Learning Team A
ACC/561
Instructor
2013
CVP and Break-Even Analysis Paper
When starting a business or buying a franchise it is critical for one to determine the star-up cost associated with the business. However, the most import item one must look at is the breakeven point. The breakeven point is important because it helps one plan out its activities to gives business owners an idea of the...

...1. Business overview & Cost analysis
In order to compete with other milkshake shacks on the same beach of the resort, the small shake in my shack is priced at $5.00, a medium shake costs $7.00, and a large shake is priced at $10.00. My shack offers classic flavors of chocolate, strawberry and vanilla, but also caters to eclectic tastes with raspberry, mocha, Oreo shakes and many other different flavors. I use chocolate, strawberry and other flavored syrup to provide the flavor...

...A cost-volume-profit analysis is a vital factor to a company. It is very important to profit planning. Cost-volume-profit (CVP) analysis is the study of the effects of changes in cost and volume on a company’s profits. It is also a factor in management decisions such as setting selling prices, determining product mix, and maximizing use of production facilities. There are five components that make up a CVPanalysis. They...

...The relationship between cost volume and profit is shown by cost-volume-profit analysis. it is an analytical tool for analyzing the relationship among cost, price, profit, sales and production volume. Mainly there are three element in cost-volume-profit analysis.
It is highly essential for the management to have the complete knowledge about the inter relationship among the cost, volume and profit. for this purpose cost-volume-profit analysis can be...

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