Joint Products CVP Analysis – Time for Methodical Review

Enyi, Enyi Patrick

doi:10.31014/aior.1992.02.04.168

Cited by 8 publications

(8 citation statements)

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“…In the context of multiproduct CVP analysis applications, Enyi [14] examines the efficacy of the Weighted Contribution Margin (WCM) with the Reversed Contribution Margin Ratio (RCMR). The WCM lacks analytical efficiency and generates suboptimal product mix because it ignores the inverse relationship between a product's contribution margin ratio (CMR) and its break-even point (BEP).…”

Section: Literature Reviewmentioning

confidence: 99%

“…When the decision under study requires the evaluation of profitability as a function of output, cost-volume-profit (CVP) analysis is an attractive decision tool to use, since it enables managers to make decisions under business conditions where costs, revenue, and volume are changing (see for example [14][15][16]). For situations involving a single product, decision makers can use CVP to determine the sales volume needed to achieve a targeted profit when sales price, variable cost, or fixed cost change.…”

Section: Introductionmentioning

confidence: 99%

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A Generalized Stochastic Cost–Volume–Profit Model

Liang

Guiffrida

Liu³

et al. 2021

Systems

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Cost–volume–profit (CVP) analysis is a widely used decision tool across many business disciplines. The current literature on stochastic applications of the CVP model is limited in that the model is studied under the restrictive forms of the Gaussian and Lognormal distributions. In this paper we introduce the Mellin Transform as a methodology to generalize stochastic modeling of the CVP problem. We demonstrate the versatility of using the Mellin transform to model the CVP problem, and present a generalization of the CVP model when the contribution margin and sales volume are both defined by continuous random distributions.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

A Generalized Stochastic Cost–Volume–Profit Model

Liang

Guiffrida

Liu³

et al. 2021

Systems

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“…Lulaj [26] showed how much cost-volume-profit analysis is used for planning and making decisions in business. Enyi [27] compared the effectiveness of Weighted-Contribution-Margin (WCM) and Reversed-Contribution-Margin-Ratio (RCMR) in multi product cost-volume-profit analysis applications. Nagar et al [28] concluded that government economic policy under uncerainity is an important componet of the firm's information enviroments and manger's volunatary decisions.…”

Section: Cost Price and Volume Properties In C-v-p Analysismentioning

confidence: 99%

Integration of Cost Volume Profit Analysis under Uncertainty in Profit Planning: A Current Application

Beykaei¹,

Abekah²,

Rahim

2020

SIAM

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Use of cost-volume-profit analysis for actual planning is often limited by an inability to properly incorporate uncertainty in the analysis when assumptions about known price and costs do not hold. We use currently available analysis software (MAPLE) in this study to demonstrate that uncertainty can be incorporated in Cost-Volume-Profit analysis and planning in practice. We show in our examples that expected selling price and variable cost changes have greater influence on expected breakeven sales levels than the impact of the standard deviations of selling price and variable cost. In particular, decreases in the expected selling price are shown to lead to significantly sharp declines in the expected breakeven quantity. By contrast, when the standard deviations of selling price or variable costs increase, only proportionate increases in the breakeven quantity are observed.

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“…Lulaj and Isaneni [26] showed how much cost-volume-profit analysis is used for planning and making decisions in business. Enyi [27] compared the effectiveness of Weighted-Contribution-Margin (WCM) and Reversed-Contribution-Margin-Ratio (RCMR) in multi product cost-volume-profit analysis applications. Nagar et al [28] concluded that government economic policy under uncertainty is an important component of the firm's information environments and manger's voluntary decisions.…”

Section: Cost Price and Volume Properties In C-v-p Analysismentioning

confidence: 99%