Cost-Volume-Profit (CVP)

Accounting Corporate Finance Financial Terms Dictionary

Contents

Cost-Volume-Profit (CVP) analysis is a way to find out how changes in variable and fixed costs affect a firm’s profits.

Companies can use CVP to see how many units they need to sell to break even (cover all costs) or reach a certain minimum rate of return.
CVP analysis makes several assumptions, including that the selling price, fixed and variable unit costs are constant.