volume of production
Effective management of the sales department of products – the center of marginal profit is based on the manager’s understanding of the content of the economic and accounting model of the relationship dynamics “Costs of an enterprise – Production volume of finished products (goods purchased) and its sales – Profit”.
In the name of the models under consideration, the phrase “The volume of production of finished goods (purchase of goods) and its sales” is used with the use of the union “and”, which means simultaneity. This phrase means that:
(1) the models under consideration are applicable both to an industrial enterprise producing and selling finished products (works, services), and to a commercial enterprise purchasing and selling goods; Continue reading
“Application of the CVP interconnection accounting model beyond the acceptable and relevant range or over long time periods.”
The CVP interconnection accounting model is a convenient model for making decisions on enterprise management within the acceptable range of the “Volume of production (purchase of goods) driver and its sales” driver. Spreading the logic of the accounting model beyond the acceptable range without changing the revenue function from product sales and the enterprise total cost function is an error, since these functions are non-linear over a wider range of changes in driver values. Continue reading