cost-volume-profit analysis

In cost-volume-profit analysis, a form of management accounting, contribution margin is the marginal profit per unit sale.

The cost-volume-profit analysis is the systematic examination of the relationship between selling prices, sales, production volumes, costs, expenses and profits.

CVP analysis (Cost-Volume-Profit analysis)

Note that unlike other measures of operating leverage, in the linear Cost-Volume-Profit Analysis Model, contribution margin is a fixed quantity, and does not change with Sales.

Cost-Volume-Profit Analysis (CVP): assuming the linear CVP model, the computation of Profit and Loss (Net Income) reduces as follows: