Cost-Volume-Profit Analysis (CVP)

1. Cost?volume-profit?analysis (sometimes called breakeven analysis) determines the effects of selling and production volume on revenues, costs, and net income. Assumptions of cost?volume?profit analysis are that the selling price is constant, costs are linear, the sales mix is constant, and inventories do not change. See also breakeven point and contribution margin. An analysis of the relationship of cost and revenue emphasizing both the volume at which there is zero profit and the influence of fixed and variable factors on the profit expectations at various levels of operation. (Also called breakeven analysis.)