Why do managers use CVP analysis, and what does it help them learn about their business?

What will be an ideal response?

Managers need to analyze business data in order to help them plan and monitor the organization's day-to-day operations. Cost-volume-profit (CVP) analysis is the study of how certain costs react to changes in business activities such as costs, selling prices, revenues, profits, and production volume[md]if you manufacture products. Management relies on the accounting department to provide the data needed to perform CVP analysis. This data allows management not only to perform CVP analysis, butalso examine operational risks as a suitable coststructure is chosen.