The purpose of this paper is to address the notion of value costing for the 21st century organizations. I will begin by defining and explaining value costing. From there I will then provide my opinion on whether or not I agree with the notion of value cos

Authors Avatar

Case 2

A Revised Income Statement, The Contribution Margin Approach

By Robert Kimble

ACC 501

Dr. Tara Murphy

September 12, 2011

The purpose of this paper is to address the notion of value costing for the 21st century organizations. I will begin by defining and explaining value costing. From there I will then provide my opinion on whether or not I agree with the notion of value costing. Finally I will discuss cost-volume-profit analysis and discuss whether or not it is still relevant in the 21st century business organization.

Cost value is the analysis of different divisions or business units of a firm on the basis of their opportunity cost and economic rent. Cost value profit (CVP) analysis is one of the most powerful tools that managers have at their command (Accounting for Management, 2011). It helps them understand the relationship between cost, value and profit in an organization. When it comes down to it the real objective of cost value is to determine what company/ business is worth keeping and which is not. Cost analysis is an important component of all economic evaluation techniques, especially when it comes to planning and self-assessment. Cost volume profit analysis is an analysis that deals with how profits and costs change with a change in volume. In particular, it looks at how well the market is or is not doing for certain products and then it gauges the effects on profits in relation to variable costs, fixed costs, selling prices, volume and products sold.

Join now!

In this day and age, it seems that the notion of value costing is important for the organizations in order for them to keep up with any competitors they may have and it could possibly help them gain an advantage over any competitors they may have, as well as stay relevant within the sectors that they are established. The value costing is also significant to understand the effectiveness of a business or the operation of an organization. The concept of value costing includes all types of cost, which affect the organizational process. In one respect, it can be explained as ...

This is a preview of the whole essay