The value of cost-volume-profit analysis is limited because it is incapable of adequately incorporating nonfinancial issues into its calculations.

Question

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Cost-volume-profit (CVP) analysis primarily focuses on how profits are affected by several factors such as sales volume, selling prices, variable costs, and fixed costs, without directly addressing nonfinancial issues like customer satisfaction, employee morale, or brand reputation.

The Value of Cost-Volume-Profit Analysis Is Limited Because It Is