CVP analysis can assist in budgeting for discretionary expenditures, such as fixed costs for advertising.

Question

Quizplus · Accepted Answer

Cost-volume-profit (CVP) analysis is used to determine how changes in sales volume affect a company's profit. By studying the relationships between fixed costs, variable costs, selling price, and sales volume, CVP analysis can assist in predicting the impact of different business decisions on profits. Therefore, it can be used to help budget for discretionary expenditures like fixed costs for advertising.

CVP Analysis Can Assist in Budgeting for Discretionary Expenditures, Such