“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”.
1.1BACKGROUND 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.
Cost-volume-profit analysis is a management tool that could be used in making vital decision when a firm is faced with problems having cost, volume profit implications. Problems within this area do abound 0and occur frequently that appropriate decision on them are near daily requirements. Some of them are profit planning, product planning, product pricing, selection of promotion mix, selection of distribution channels make-or-buy decision and 0add-or-drop decisions.
According to J.M Pandey “the analytical technique used to study the behaviour of profit in response to changes in volume, costs and price is called the cost-volume-profit analysis it is the device used to determine the usefulness of the profit planning process of a firm.
TABLE OF CONTENT
CHAPTER ONE INTRODUCTION
1.1Background of study1
1.2Statement of problem3
1.3Objective of study4
1.4Scope and limitation5
CHAPTER TWO: LITERATURE REVIEW
2.1 Planning function7
2.2 Managerial control function9
2.2.1 Elements or steps in controlling10
2.3 The Concept Of Profit11
2.4 Profit Planning And Control An Overview13
2.5 Component Of Comprehensive Planning And Control14
2.6 Need For Profit Planning And Control15
2.7 Limitation Of Profit Planning And control16
CHAPTER THREE: SUMMARY OF FINDINGS
3.1 Summary of finding18
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