Answer:
Manager can use CVP analysis to determine the break-even point, margin of safety, contribution per unit, level of sales to achieve a desired profit and the selling price at which a firm begins to make profit. CVP helps managers to analyse costs with a view to ensuring profitable operations.
Explanation:
Break-even point is the point at which total cost equals total revenue.
Margin of safety measures the level of reduction in sales before a firm starts experiencing loss.
Contribution per unit is the difference between selling price and unit variable cost.
CVP analysis helps to measure the relationship among cost, volume and profit.
