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Cost-volume Profit (CVP) graph

 Cost-volume Profit (CVP) graph refers to a graph that shows the relationship between costs, volume, and profits.

The CVP graph also shows both the net income and net loss areas. Thus, the amount of income or loss at each level of sales can be derived from the total sales and total lines.

A CVP graph is useful because the effects of a change in any element in the CVP analysis can be quickly seen. For example, a 10% increase in selling price will change the location of the total revenue line. Likewise, the effects on total costs of wage increases can be quickly observed.

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