Which statement is true about cost-volume profit (CVP) analysis?
A) CVP analysis is a powerful tool for planning and decision making.
B) CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or cost levels on profit.
C) CVP analysis shows how revenues, expenses, and profits behave as volume changes.
D) CVP analysis can be used in both single-product and multi-product firms.
E) All of these statements are true.

Question

Quizplus · Accepted Answer

All of these statements are true. CVP analysis is a powerful tool that shows how revenues, expenses, and profits behave as volume changes. It allows managers to perform sensitivity analysis by examining how changes in prices or cost levels will impact profit. CVP analysis can also be used by both single-product and multi-product firms.

Which Statement Is True About Cost-Volume Profit (CVP) Analysis