When there is a high probability that sales will decline in an organization,managers use CVP analysis in their decision making processes to determine whether or not they need to change the cost structure to have more variable costs and fewer fixed costs.

Question

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CVP analysis (Cost-Volume-Profit Analysis) is a tool used by managers to determine the impact of changes in sales volume, prices, and costs on a company's profits. If there is a high probability of declining sales, managers may use CVP analysis to determine if they need to adjust their cost structure to reduce fixed costs and increase variable costs to maintain profitability. Therefore, the statement is true.

When There Is a High Probability That Sales Will Decline