Ace the DECA Financial Consulting Challenge 2026 – Unleash Your Business Superpower!

The main purpose of cost-volume-profit (CVP) analysis is to determine how changes in costs and volume affect a company's income. This analytical tool helps businesses understand the relationship between fixed and variable costs, sales volume, and profits, enabling them to make informed operational and financial decisions. By utilizing CVP analysis, managers can predict how changes in sales levels—either increases or decreases—will impact the bottom line and facilitate decision-making regarding pricing, product mix, and cost control strategies.

Through this analysis, organizations can identify their break-even point, which is the level of sales at which total revenues equal total costs, allowing them to gauge the financial viability of their operations under various scenarios. This insight is critical for strategic planning and financial forecasting, helping companies navigate their path toward profitability and sustainability.