Using cost – volume – profit analysis by management

Founded on the distinction between variable costs and fixed costs, the analysis of the relationship between the volume of activity, costs and profits is directed to decision-making in order to guide an entity’s management to obtain optimal results. It is known that the models that individualize the development of the expenses at an entity’s level represent the basis of cost analysis. Then, given the fact that foresight imposes taken into account fluctuations in an activity, the grouping of expenses into variable and fixed will be used for forecasting management, for evaluating an entity’s performance and for analyzing decisional alternatives.