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.

1. Cost Volume Profit Analysis
SUBMITED BY-
SURAJ KUMAR 1805205020
AVINASH CHANDRA 1805205021
RAVIKANT KUMAR 1805205023
NIRAJ SHARMA 1805205024

2.  It aims at measuring variation of cost with profit.
 relationship existing amongst costs, revenue, activity level and resulting profit.

3. Fixed Cost
the costs which incurred for a period and which within certain output and
turnover limits.
Example: Rent, insurance of factory building etc.
Variable Cost
These costs tend to very with the volume of activity. Any increase in activity
results in an increase in the variable cost and vice versa.
Example: Cost of direct labour, direct material, etc.

4. Objectives of CVP Analysis
– Understand the interaction among
 Prices of products
 Volume or level of activity
 Per unit variable cost
 Total fixed cost
 Mix of product sold

5. Assumptions
Constant sales price.
 Constant variable cost per unit.
 Constant total fixed cost.
 Constant sales mix.
 Units sold equal units produced.

6. How is CVP Analysis Used?
CVP analysis can determine, both in units and in sales dollars:
• the volume required to break even
• the volume required to achieve target profit levels
• the effects of discretionary expenditures
• the selling price or costs required to achieve target volume
levels
• CVP analysis helps analyze the sensitivity of profits to
changes in selling prices, costs, volume and sales mix.