Managers can use cost-volume-profit analysis to help handle risk and uncertainty.

Question

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Cost-volume-profit analysis provides valuable information to managers about the relationships between costs, volume, and profit. By understanding these relationships, managers can make informed decisions about pricing strategies, production levels, and cost management strategies that can help mitigate risk and uncertainty. For example, by analyzing break-even points and profit margins at different levels of production, managers can estimate the financial impact of changes in demand or cost structure and make adjustments to their business strategies accordingly.

Managers Can Use Cost-Volume-Profit Analysis to Help Handle Risk and Uncertainty