Comment on cost-volume-profit analysis a valuable tool for managers and suggest other analysis that supplements the CVP.CVP is among the most...

Cost-volume-profit (CVP) analysis. also called break-even
analysis is a technique to analyse and understand the relationship between the cost
sales volume and profit for products manufactured and sold by a company. This
relationship can be expressed in form of mathematical equation as well as in the form of
a graph. When the graphical version of the technique is used, it may is called
break-even chart technique.

The CVP analysis is useful in
taking decisions related to installing manufacturing capacity and selling prices taking
in to consideration that different levels of manufacturing capacity display different
structure of fixed and and variable components of manufacturing cost, and the impact of
difference between selling price and variable cost on contribution for recovering the
the fixed costs and making profit.

However it will not be
right to say that it is the most valuable tool available to managers. Managers typically
need to pay attention to a wide variety of factors and decisions, for which they need to
employ a wide variety of tools and techniques. Many of such techniques are equally
important to effective management.