An important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is:
A) Cost-volume-profit analysis.
B) Variance analysis.
C) Target income analysis.
D) Least-squares regression analysis.
E) Process costing.

Question

Quizplus · Accepted Answer

Cost-volume-profit (CVP) analysis is a powerful tool for predicting the volume of activity, costs to be incurred, and the profit to be earned. It helps in providing insights into the relationship between fixed and variable costs, sales volume, unit price, and the resulting profit. By using CVP analysis, businesses can improve their decision-making in areas like pricing strategies, product mix and volume, advertising budgets, etc. Therefore, A is the correct answer.

An Important Tool in Predicting the Volume of Activity, the Costs