An expand proposal on cost-volume-profit analysis by sensitivity analysis and scenarios

Abstract

This paper aims to expand the Cost-Volume-Profit (CVP) analysis using the Sensitivity Analysis (SeA) and Scenarios (ScA) at the Point of Equilibrium (PE) of monoproducing companies.

In addition, the theoretical contribution is implemented computationally in a module in the web tool $LV€P. To achieve this goal, mathematical and computational modeling was used as a scientific method of research. To illustrate its applicability, a hypothetical simulation in the developed module was used. As a result, the PE was determined for three scenarios (optimistic, most likely, and pessimistic) and the SeA and ScA were generated. This evidenced an improvement in the quantity and quality of the available information, facilitating the interpretation of the exit indicators (PE), when they undergo changes in the main input variables involved (fixed costs and expenses, variable costs and expenses, and prices). In summary, the CVP analysis, amplified by SeA, ScA and allied to the development of a module in $LV€P, is shown as an alternative to assist the decision-making process.