189753
Description
Mind Map by Shahid Musthafa, updated more than 1 year ago
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Created by Shahid Musthafa
over 10 years ago
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Limitations of CVP Analysis
- .The limitations of the CVP
analysis can be based with the
assumption of the cvp analysis
.CVP Analysis can be used to
access the cost behaviour drived
by the changes in volumne and it
is based of some underlying
assumptions .But in real business
scenerio the cost behaiour is
effected by some other more no:
of factors such as
- Change in the Unit prices of the
materials used
- Wars
- Efficiency
- Change in the
production
technology
- Some other misc factors in
the business environment
- Assumtions of
CVp analysis
- Operations within a
relevant range
- Fixed cost
remains
constant
- Variable Cost per unit
remains constant
- Sales mix remains
Constant
- Unit price
remains
constant
- Efficiency and
productivity
remains constant
- Only a single driver for the
Cost and Revenues AKA
Volumne of production
- All what is produces equals
all what is sold .so it is
bliindly assumed that there
will be no op stock or
Closing stock of inventory
- Operations within a
relevant range
- Change in the Unit prices of the
materials used
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