Explain why cost-volume-profit analysis can be useful to managers
Cost-volume-profit (CVP) analysis is a powerful tool for planning and decision making. Because CVP analysis emphasizes the interrelationships of costs, quantity sold, and price, it brings together all of the financial information of the firm. CVP analysis can be a valuable tool to identify the extent and magnitude of the economic trouble a division is facing and to help pinpoint the necessary solution. CVP analysis can address many other issues as well, such as the number of units that must be sold to break even, the impact of an increase in price on profit. Additionally, CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or cost levels on profit.
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Answer the following statement true (T) or false (F)