Cost-Volume-Profit (CVP) and Break-Even Analysis (Video) (Course Id 2487)

Cost-volume-profit (CVP) and break-even analysis are two related ways to quickly answer some key business questions that include:

• How much will our profits go up if sales volume goes up by 100 units?
• What do my sales need to reach for my new company to be profitable?
• How much will profits go down if we don't sell the budgeted number of units?

CVP and break-even analysis are incredibly useful tools that finance professionals use throughout their careers. The formula is simple but powerful. The CVP formula is the basic equation that determines almost every line of the income statement. It's the formula that drives projections, forecasts, and budgets. The formula can be used for a wide range of analyses that answer key business questions.

The course begins with a quick overview of how CVP analysis is used to calculate profitability and how break-even analysis can help you find a target sales volume. We also explore some key questions it can answer. The rest of this course dives deeper into these concepts. We'll look at the CVP and break-even formulas in more detail and how to use them. I'll show how they can help inform business decisions.

This course provides the basics for those new to CVP while providing insights to those with experience with CVP and break-even analysis.

Course Learning Objectives

• Recall the CVP and break-even formulas.
• Identify how to calculate the break-even point for multiple products.
• Recognize how costs and profits change across the relevant range of analysis.