Mastering CVP Analysis and Flexible Budgets: A Guide for

Class, The CVP analysis and flexible budget are necessary tools for business owners.It will allow them to monitor expenses against profits for budgetary decision making. Projecting profits against expenses is an important factor when considering things such as startup expenses or workforce adjustments.Flexible budgets are intragyral in business as they help monitor efficiency in relation to profits. Example. I open a shoe restoration business and rent out a small store front.That is rent, plus utilities, security. These are my fixed costs that amount to $10,000 a month (Fixed Cost) I hire 4 employees at $1000 a month each, and janitorial at $500 a month (Variable). That is $14500 in expenses.By the 15thof the month, I have only made $5000. CVP analysis show I am not projected to break even and as a business owner variable cost can be adjusted (Downsizing employees), or reducing the days janitorial comes. References Warren, C.S. (2018). Survey of accounting (8th ed.). Retrieved fromhttp://www.cengage.comLinks to an external site. Machuga, S., & Smith, C. (2013). A case method approach of teaching how cost-volume-profit analysis is connected to the flexible budgeting process and variance analysisLinks to an external site.. Retrieved fromhttp://digitalcommons.www.na-businesspress.com/JAF/MachugaS_Web13_6_.pdfLinks to an external site.