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.

Share it:  Cite

More from this Section

  • FICA Taxes
    In 1937 Congress enacted the Federal Insurance Contribution Act (FICA). FICA taxes are ...
  • Declaration date
    On the declaration date the board of directors formally declares (authorizes) the cash ...
  • Purchase discount
    Purchase discount means a cash discount claimed by a buyer for prompt payment of a balance ...
  • Contractual interest rate
    The contractual interest rate, often referred to as the stated rate, is the rate used ...
  • Normal balance
    The normal balance of an account is on the side where an increase in the account is recorded. ...