Audit and economical analysis

Production volumes, cost and profitability analysis

(CVP analysis)

Income = constant costs + variable costs + profit

Income = permanent costs + variable expenses per unit * product quantity + profit.

CVP analysis - analysis of cost, revenue and profitability.

The main tasks of CVP analysis are:

- determination of the point of sale of the sales volume, which allows full coverage of expenses;

- determination of harmfulness of volume of production;

- determine sales volumes on the amount of profits required;

- evaluate the sales volume of the company's competitiveness;

- establishing the cost of products that will allow to meet demand and revenue at a predetermined level;

- selecting effective production technologies;

- implementation of the optimal production plan.

expectations from the cpv:

- division of expenses into variable and indestructible content;

- constant costs remain unchanged, depending on the size of the product;

- change of variable costs in proportion to the change in production volumes;

- constant price unit of produced goods and production resources;

- continuity of product range;

- equality of sales and sales volumes.

It is assumed that the business activity of the company will remain unchanged.

  Key elements of CVP analysis:

• 
  critical weight;
  
• 
  growth coefficient;
  
• 
  safety standard;
  
• 
  structure of structure;
  
• 
  structure of expenditures;
  
• 
  operation rich;
  
• 
  the effect of the financial richness.
  
• 
  source of cvp analysis:
  
• 
  accounting and reporting;
  
• 
  account account and report;
  
• 
  statistical accounting and reporting data;
  
• 
  out of reach information.
  

The most important factor of profit formation in the movement of economic assets is the increase of assets in the form of increase of proceeds in the form of monetary and monetary equivalents from commercial activities (production) and production costs. This is due to the dependence on profits and income and expenditure incurred.

The accumulation of profits depends on the type of business of the enterprise. If it is a manufacturing enterprise, the main source of profit is the product produced and sold. If it is a service-related enterprise, the bulk of the profit will be the proceeds from the service, and so on. This is why it is desirable to proceed from the work of the analysis in the analysis process.

A business-generating force is a gain that is gained by the end of the business (in the form of ownership). Therefore, profit is regarded as a single indicator of the performance of all enterprises regardless of ownership. The benefits are also the incentive of targeted action. Trading activity and its duration are often dependent on the size, accuracy, and use of the item. Profit is derived from the equilibrium of previous actions of the economic asset themselves.