Cost-Volume-Profit Analysis As A Tool For Profit Planning And Control

TABLE OF CONTENT

CHAPTER ONE INTRODUCTION 

1. Background of study                                                     1
2. Statement of problem                                                    3
3. Objective of study                                                                   4
4. Scope and limitation                                                      5

CHAPTER TWO: LITERATURE REVIEW

2.1 Planning function                                                              7

2.2 Managerial control function                                                        9

2.2.1 Elements or steps in controlling                                               10

2.3 The Concept Of Profit                                                       11

2.4 Profit Planning And Control An Overview                       13

2.5 Component Of Comprehensive Planning And Control               14

2.6 Need For Profit Planning And Control                              15

2.7 Limitation Of Profit Planning And control                        16

CHAPTER THREE:  SUMMARY OF FINDINGS

3.1 Summary of finding                                                          18

3.2 Conclusion                                                                        18

3.3 Recommendation                                                               19

3.4 Bibliography                                                                     22

CHAPTER ONE

INTRODUCTION

“There have been some academic assertions to the effect that accountants and managers who are employed in the industry do not use most of the mathematical decision making tools, cost-volume-profit analysis inclusive”.

1.1     BACKGROUND OF STUDY

“Some industries today are encountering problems raised by expansion through increased sales and the introduction of new products. Many on the other hand are facing problem of contraction due to the introduction of substitute materials, products. Whenever is the case, it is vitally important that management should be in a clear position to plan for these changing levels of activity”.

Apart from the problem of contraction and expansion, during the period of economic depression a business 0may be faced with the alternative or closing down or selling its products at a price below the total cost. Also profit   planning and control is made more difficult by the changes in the general pattern of demand 0for the types of products offered and the action of competitors.

In order to solve the problem created by the above situation profit planning, cost and decision making require an understanding of the characteristics of costs and their behaviour at different operating levels. One of the most important tools develop by accountants to assist management in meeting the challenges is the cost volume-profit-analysis (C.V.P) otherwise known as the behaviour analysis.