For the company you chose to post on in Topic 2 (Insert below this) return to the financial statement and perform a horizontal analysis on the income statement.What is the trend in the company's net income?What changes are primarily driving this trend?Include a link to this financial statement in your post.

TOPIC 2 post:

Cost-Volume-profit analysis is a method used in cost accounting process whose objective is to determine the effect that varying cost and volume levels have on the operating profit. Simply, it assesses the break-even point of various cost structures and sales volume which are essential to managers in making short-term decisions.

A marketing company like Walmart can use the tool to analyze its contribution margin. This is the amount that remains from the revenue realized from the sales after a deduction of all variable expenses (Horngren et al., 2011). The company uses the amount that remains to cover the fixed costs, and the remainder is considered as the profit. Also, CVP can be used by the company to determine the number of units they need to sell in order to break-even. This will give the company the exact amount of sales they need to sell to attain the minimum profit margin.

An example of how companies can use CVP analysis can be illustrated by a situation when Walmart Company makes sales revenue of $500,000. With a variable cost of $300,000, the company will have a contribution margin of $200,000. When Walmart Inc. sells 50,000 units in a year with a sales price of $10 and a variable cost of $6, the remaining $4 is the contribution margin in every unit.

One type of decision that a company may make using the results obtained from the CVP analysis will be determining whether there is a need to reduce or increase the variable cost to maximize the revenue. Again, the CVP analysis is essential in deciding on what methods or criteria to use to break-even (Blocher et al., 2011). This guides the management of making sound decisions on proper marketing strategies. Moreover, it helps the managers to make proper decisions on what variables need to be altered in order to maintain or increase the company's productivity.