An Analysis of Cost Volume Profit of Nestlé Limited

Cost volume profit analysis scrutinizes the relationship between changes in activity and changes in total sales revenue, cost and profit. It may provide very useful information particularly for a business that is commencing operations or facing difficult economic conditions. Cost volume profit analysis determines how many units of a product must be sold so that the business reaches its break-even point. It allows the business to consider the effect on profits of various changes in operating costs and revenues such as a reduction in selling price or an increase in fixed cost to determine the sales volume required to achieve a specific profit level and to establish the amount by which the current sales level can decrease before losses are incurred.