In which one of the following calculations would CVP analysis be most important?
A)calculating depreciation expense
B)setting selling prices
C)determining how many employees to hire
D)estimating units to be produced at capacity

Question

Quizplus · Accepted Answer

CVP analysis (Cost-Volume-Profit analysis) is most important when setting selling prices. This is because CVP analysis helps determine the break-even point and the profit potential at a given level of sales. By understanding the relationship between costs, selling price, and volume, managers can make informed decisions about pricing strategies, such as setting prices to maximize profit or to gain market share.

In Which One of the Following Calculations Would CVP Analysis