Complete Question:
Cost-volume-profit (CVP) analysis is a simple but powerful tool to assist management in making operating decisions. Which of the following does not represent a potential use of CVP analysis Aids in evaluating tax planning alternatives?
A. Ability to compute the break-even point.
B. Aids in evaluating tax planning alternatives.
C Ability to determine optimal sales volumes.
D. Aids in determining optimal pricing policies.
Answer:
Aids in evaluating tax planning alternatives.
Explanation:
Examination of the cost-volume profit (CVP) is used to assess how price-volume changes will affect operating profit and net revenue of a company.
There are several considerations in the conduct of this study, including that sales rates per product are constant. The cost is continuously variable per hour. There are constant overall fixed costs.
To order to make informed choices about the goods or services that they sell, often businesses and accountants use cost-volume benefit analysis. CVP analysis plays a greater role to management accounting than in finance accounting in this regard.
