CVP Analysis in Situations Subject To Change

Revenue and Cost will change and also sales volume because of a number of factors involving:

a) Increased competition may need selling price discounts to stimulate demand

b) Overhead costs, wage rates and material prices may all change since of the impact of inflation

c) Material usage may change whereas scrap is expected to fall due to improved methods, better material quality or better trained workers

d) Labour efficiency may change whereas improved training programs or a reduction in labour turnover is expected to happen

e) Overhead expenses may fall because of more efficient placement of order along with suppliers who offer best terms

f) Product mix may change either like part of overall company strategy or because of increased competition