This document discusses cost volume profit (CVP) analysis, which measures the relationship between costs, revenue, activity levels, and profit. It defines fixed costs as those that do not vary with output, like rent, while variable costs vary with activity levels, like direct labor. The objectives of CVP analysis are to understand how prices, volume, variable costs per unit, fixed costs, and sales mix impact profit. It assumes constant prices, costs, fixed costs, and sales mix. CVP analysis can be used to determine the volume needed to break even or hit profit targets and how prices, costs, and volume impact profits.