A basic financial model that summarizes the effects of volume changes on an organization's costs,revenue,and income is the
A)total revenue-total cost model.
B)break-even model.
C)cost-volume-profit model.
D)program,planning,and profit model.

Question

Quizplus · Accepted Answer

The cost-volume-profit (CVP) model summarizes how changes in volume (i.e. the number of units sold) affect a company's costs, revenue, and income. It calculates the breakeven point, where total revenue equals total cost, and analyzes the impact of changes in sales price, variable costs, fixed costs, and sales volume on the organization's profits. This model is widely used in managerial accounting and financial analysis. Therefore, the CVP model is the best choice for the given scenario.

A Basic Financial Model That Summarizes the Effects of Volume