There are two equivalent methods for performing multi-product CVP analysis: the contribution margin method and the margin of safety method.

Question

Quizplus · Accepted Answer

The two equivalent methods for performing multi-product CVP (Cost-Volume-Profit) analysis are the contribution margin method and the weighted-average contribution margin method, not the margin of safety method. The margin of safety method is used to determine how much sales can fall before a business reaches its break-even point, rather than for analyzing the relationship between cost, volume, and profit for multiple products.

There Are Two Equivalent Methods for Performing Multi-Product CVP Analysis