Please I need help adding a response to this post that include citations and references.

I must commend you on your outstanding participation this week. Your advanced analytical skills deserve recognition. Initially, I fully support your research on CVP analysis, which serves as a method for businesses to assess how alterations in costs (both variable and fixed) and sales volume impact a company's income. Evaluating income statements is crucial, but it's also important to grasp the purpose of both the regular income statement and the contribution income statement, which focuses on analyzing the net operating margin based on costs (variable and fixed). Lastly, your conclusion was excellent as it effectively summarized the comparison between theory and application. By integrating all the components and conducting CVP analysis, companies can expedite their decision-making process regarding investments that may alter their cost structures and determine the resulting effects on sales and profitability more efficiently.

After carefully examining your informative and remarkable research, I conducted my own investigation to further enhance our comprehension of the topic. Firstly, CVP analysis plays a vital role in forecasting and managerial control, specifically focusing on cost analysis and the variability of expenses. This analysis considers both fixed and variable costs (Trifan & Anton, 2011). As a result, the sales volume must surpass a certain threshold to cover these fixed expenses. The breakeven point, also referred to as the critical point, neutral point, or breakeven, serves as an indicator representing the stage at which the revenue generated from product sales offsets all variable expenses associated with the sales volume and all fixed expenses incurred during the given period, resulting in zero profit (Trifan & Anton, 2011). In simpler terms, the breakeven point corresponds to the level of activity, be it in terms of turnover or volume, at which the revenue generated from product sales equals the expenses, resulting in zero profitability.

It is worth noting that CVP analysis is a technique designed to analyze short-term planning decisions (Phillips, 1994). Several important factors and assumptions underlie CVP analysis, including the ability to separate semi-variable costs into fixed and variable components, the expectation that fixed costs will remain constant, the belief that variable costs will vary proportionally with sales volume, the understanding that sales volume is the sole factor affecting costs and revenues within the relevant range, and the assumption that the efficiency level remains unchanged (Phillips, 1994). This analysis holds great significance as it provides management accounting with a tool to assess the cost, volume, and profit aspects of initiating a potentially successful business (Machuga & Smith, 2013). Furthermore, CVP analysis offers a model for calculating target profit, break-even points, margin of safety, and various scenarios that need to be considered when making investment decisions or adjustments (Machuga & Smith, 2013).

Additionally, it is crucial for decision-makers to understand how judgment and estimation in managerial accounting data can introduce uncertainty (Downen, 2020). Since managerial accounting often involves projected data, it is more susceptible to estimation and, consequently, prone to higher levels of uncertainty. To address this, decision-makers employ CVP analysis as a tool to mitigate such uncertainty and make well-informed and prudent choices (Downen, 2020). In order to minimize uncertainty in managerial accounting, it is vital to gather extensive information, involve relevant stakeholders to gain diverse perspectives and improve the interpretation of potential scenarios (Downen, 2020).

In conclusion, in order to establish a thriving business or effectively manage managerial accounting, it is crucial to grasp the essential steps required to attain desired profits and determine the break-even point, as well as comprehend the relationship between variable costs and fixed costs (Phillips, 1994). CVP analysis serves as an indispensable tool that should always be taken into consideration when adjusting the aforementioned elements, as it provides insights into the potential outcomes of our decisions. Once again, I extend my gratitude to you, Julio, for your valuable information, and I hope that my information contributes to enhancing our understanding.

References

Downen, Tom, PhD., C.P.A. (2020). Accounting for Uncertainty in Cost-Volume-Profit Analysis. Management Accounting Quarterly, 22(1), 25-30. https://0634euf45-mp03-y-https-www-proquest-com.prx-keiser.lirn.net/scholarly-journals/accounting-uncertainty-cost-volume-profit/docview/2642951347/se-2

Machuga, S., & Smith, C. (2013). A Case Method Approach of Teaching How Cost-Volume-Profit Analysis is Connected to the Flexible Budgeting Process and Variance Analysis. Journal of Accounting and Finance, 13(6), 178-192. https://0634euf45-mp03-y-https-www-proquest-com.prx-keiser.lirn.net/scholarly-journals/case-method-approach-teaching-how-cost-volume/docview/1502619176/se-2

Phillips, P. A. (1994). Welsh Hotel: Cost-volume-profit analysis and uncertainty. International Journal of Contemporary Hospitality Management, 6(3), 31. https://0634euf45-mp03-y-https-doi-org.prx-keiser.lirn.net/10.1108/09596119410059236

Trifan, A., & Anton, C. (2011). USING COST - VOLUME - PROFIT ANALYSIS BY MANAGEMENT. Bulletin of the Transilvania University of Brasov.Economic Sciences.Series V, 4(2), 207-212. https://0634euf45-mp03-y-https-www-proquest-com.prx-keiser.lirn.net/scholarly-journals/using-cost-volume-profit-analysis-management/docview/1000454985/se-2