Cost-volume-profit analysis, or CVP, is something companies use to figure out how changes in costs and volume affect their operating expenses and net income.In other words, CVP is amethodical analysisof the dynamic inter-relationship betweensellingprices, sales and production volume, costexpenses, and profits.

Respond to the following:

• Explain each of the three elementsofCVP analysis.
• Discuss how managers useCVP analysis.