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How is Cost-Volume-Pricing analysis useful in making pricing and product mix decisions? Why is it...

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Accounting

How is Cost-Volume-Pricing analysis useful in making pricing and product mix decisions? Why is it important that we have a good understanding of the way costs behave (fixed / variable / relevant range) in order for the tool to be effective? What makes it difficult to get this understanding in the real world and what tools can we use to help us get as close as possible. When is the contribution margin ratio approach to CVP analysis most useful? Why?

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