QAPsychology › To which function of management is CVP analysis most applicable?
Q

To which function of management is CVP analysis most applicable?

a. planning

b. organizing

c. directing

d. controlling

A

Answer: a. planning

The Cost-Volume-Profit (CVP) analysis is a method applied by management to ascertain the effect of the organization’s profitability due to the changes in costs and volumes. To carry out this analysis, management must plan their production schedule to ensure that they maintain company value. The first approach is to carry out a planning process where they can provide relevant information to the managers and executive members of the company. This information usually contains analyses of how the cost of products and volumes affect profitability.

1 year ago
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