FREE IGNOU MCO-05 SOLVED ASSIGNMENT 2023

(c) CVP Analysis and Breakeven Analysis:

CVP Analysis (Cost-Volume-Profit Analysis):

– CVP analysis is a tool used to study the relationship between costs, sales volume, and profitability.
– It examines how changes in sales volume, variable costs, fixed costs, and selling prices affect the company’s net income.
– CVP analysis helps in determining the breakeven point, the level of sales required to cover all costs and generate zero profit.

Breakeven Analysis:

– Breakeven analysis is a specific type of CVP analysis that focuses on determining the level of sales (in units or revenue) required to cover total costs and result in zero profit.
– It helps in understanding the level of sales needed to avoid losses or achieve a desired level of profit.
– Breakeven analysis considers the relationship between total costs (fixed and variable) and total revenue.