THE UTILITY OF ANALYZING COST-VOLUME-PROFIT RELATIONSHIP THROUGH THE DIRECT-COSTING METHOD FOR DECISION MAKING PROCESS

Nelea CHIRILOV, Svetlana MIHAILA Academia de Studii Economice din Moldova

Abstract

In this article it is analyzed the cost-volume-profit relationship with the aim of profit optimization and elaboration of optimum economic decisions. The statement also reflects methodological case studies which highlight the necessity of the following indicators: break-even point, contribution margin, reserve of financial stability, sales volume required for obtaining target profit, marginal price. The results are presented and are analyzed by authors. The article ends up with the conclusions of the authors with regards to advantages provided by the calculations and analysis which can be performed on the basis of cost-volume-profit relationship through the direct-costing method for decision making process. Keywords: cost-volume-profit, direct-costing method, break-even point, variable costs, fixed costs, profit.