Asked by Vanessa Grossman on Jul 09, 2024
Verified
In CVP analysis the term "cost" includes manufacturing costs and selling and administrative expenses.
CVP Analysis
Cost-Volume-Profit Analysis, a managerial accounting method that examines the impact of varying levels of costs and volume on operating profit.
Manufacturing Costs
These are expenses directly related to the production of goods, including labor, materials, and overhead.
Selling
The process of promoting and transferring goods or services to a buyer in exchange for money.
- Comprehend the core principles and underlying assumptions critical to Cost-Volume-Profit (CVP) analysis.
Verified Answer
JH
Jasmine HandyJul 14, 2024
Final Answer :
True
Explanation :
In CVP analysis, the term "cost" includes all expenses related to manufacturing a product (i.e., direct materials, direct labor, and manufacturing overhead) as well as selling and administrative expenses (i.e., marketing, salaries, and office expenses).
Learning Objectives
- Comprehend the core principles and underlying assumptions critical to Cost-Volume-Profit (CVP) analysis.