PP Wk 7

Please response to the 2 peers discussion of the following questions Cite 2 scholarly authors in APA format.

*****Pick a publicly-traded company and exam the company products. If the company produces many products, Explain why and how it is important for management to understand cost-volume-profit relationships.

1AThe Cost-Volume-Profit (CVP) analysis serves as an essential management accounting instrument which enables companies to determine the impact of changing costs, sales volumes and pricing structures on their overall profitability. Management can make better profit optimization decisions through an analysis of the relationships between fixed and variable costs alongside sales price and contribution margin (Wann, 2023). Reese’s Peanut Butter Cups function as The Hershey Company's leading product that contributes greatly to both revenue and profit. The analysis of CVP dynamics for Reese’s is crucial because prices of essential ingredients like cocoa experience significant fluctuations. The cost of cocoa nearly tripled during 2024 which represented approximately 20% of Hershey’s cost of goods sold and significantly impacted profit margins (Tietz, 2024).

The North America Confectionery segment at Hershey experienced a 4% sales volume reduction in the same year because core U.S. confectionery brands faced decreased demand. The firm implemented price increases throughout its product range which resulted in a 4% price realization boost. Segment income dropped by 5.5% even though prices increased due to escalating commodities and supply chain expenses. Hershey's profit margin fell from 34.2% in 2023 to 32.3% in 2024. To maintain profitability during tough market conditions, Hershey's management needs to regularly assess costs, sales volume, and pricing (The Hershey Company, 2025).

References: The Hershey Company. (2025).  Notice of 2025 annual meeting and proxy statement [2024 annual report].  https://hershey.gcs-web.com/static-files/b7a1de67-59c7-4057-a3ae-69abd1a7cdd3  

Tietz, W. (2024, September 6).  How does the rising price of cocoa impact The Hershey Company’s variances? Accounting in the Headlines.  https://accountingintheheadlines.com/2024/09/06/how-does-the-rising-price-of-cocoa-impact-the-hershey-companys-variances/ 

Wann, B. (2023, February 2).  Cost-volume-profit (CVP) analysis—Explained with examples. Accounting Professor.  https://accountingprofessor.org/cost-volume-profit-cvp-analysis-explained-with-examples/

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1B.  

Cost-volume-profit (CVP) analysis is a method of evaluating the impact that varying levels of costs and volume have on a company's operating profit. Cost-volume-profit (CVP) analysis, also referred to as breakeven analysis, can be used to determine the  breakeven point  for different sales volumes and cost structures. The breakeven point is the number of units that need to be sold—or the amount of sales revenue that has to be generated—to cover the costs required to make the product. CVP analysis can be useful for companies when making short-term business decisions. Running a CVP analysis involves using several equations for price, cost, and other variables; these equations are plotted on a graph (Kenton, 2024).

HP  is a publicly traded company that is perhaps best known for its laptops, desktops and printers. But over the years it has rolled out several other products as well, including  VR headsets  for both the workplace and gaming, and industrial  3D printers , which are used across the aerospace, consumer goods and electronics industries. The company has even created its own  autonomous robot  that can generate accurate construction site layouts (Glover, 2025).

Hewlett-Packard, commonly known as HP, is a prominent player in the computing industry with a substantial share of the global PC market. The company offers a diverse range of products that cater to various customers, from individuals seeking basic computing devices to businesses requiring advanced technology solutions. HP’s product lineup includes several series, each designed to meet specific user needs. These product lines highlight HP’s ability to adapt to market trends and user preferences, solidifying its position as a leader in the computer industry. With offerings ranging from entry-level laptops to high-performance business servers, HP makes technology accessible to a broad audience. By remaining attuned to consumer needs, HP continues to innovate and shape the way we use computers for work, education, or entertainment. Each HP product line results from thoughtful consideration of the specific demands of its target market, delivering reliable solutions that users trust. HP (Hewlett-Packard) remains a household name in technology, offering a diverse array of products for various needs. Here’s a breakdown of their primary product lines:

Laptops

· HP Pavilion: A versatile range of laptops for everyday use, balancing affordability and functionality.

· HP Chromebook: Laptops running Google’s Chrome OS, known for simplicity, speed, and web-centric usage.

· HP Stream: Emphasizes cloud computing and portability, with lightweight designs ideal for constant connectivity.

· HP EliteBook: Business-focused laptops offering top-tier security, durability, and performance.

· HP Envy: Blends powerful specs with sophisticated design, targeting users wanting both style and substance.

· HP Spectre: The premium flagship line showcasing innovative features, ultra-slim profiles, and cutting-edge technology.

· HP OMEN: Designed for gaming enthusiasts, delivering high-performance hardware optimized for smooth gameplay.

Desktops

· HP Pavilion Desktop: All-purpose desktop computers suitable for home and office tasks.

· HP ENVY Desktop: Offers more power and customization for demanding users like content creators.

· HP All-in-One (AIO): Space-saving computers integrating the display and processing unit into a single sleek package.

· HP OMEN Desktop: Premium pre-built desktop PCs built for serious gaming.

Printers

· HP LaserJet: A renowned line of laser printers best known for fast, high-quality monochrome printing in business settings.

· HP OfficeJet: Versatile inkjet printers that can handle a variety of home and office printing tasks.

· HP DeskJet: Affordable inkjet printers intended for basic home printing needs (Hall, 2024).

 

The Chromebook Plus series has proven to be a great range for the  HP  brand. Design-wise, the computer is nearly identical to HP's other x360 models. The biggest difference is the display size. Combine the superior performance of the Chromebook Plus x360 with its inherently flexible nature and you have a capable work machine. The ability to flip the display around and turn the device into a tablet is a useful function, as the Plus computers are among the first  Chromebooks  to support Photoshop on the web (Cadenas, 2024). In order to ensure that the ability to make money off the Chromebook is there, HP will need to consider an in-depth Cost-Volume-Profit analysis. If the cost of sourcing parts and/or constructing this complicated machine (including salary hours and all overhead) extends past the profit margin for the sales of this item the HP will lose money on this venture. It will be crucial that HP understand all the factors that go into the CVS (also known as a “Break-Even Analysis”) in order to ensure they are making the right decision, both at the initial idea stage, as well as throughout the duration of the marketing of the product to account for changes and fluctuations in potential variables to the CVS.

 

References

Cadenas, C. (2024, December 1st, 2024).  This HP Chromebook Made Living Without Windows Easy and It’s On Sale for Cyber Monday. ZDNET.  https://www.zdnet.com/article/this-hp-chromebook-made-living-without-windows-easy-and-its-on-sale-for-cyber-monday-2024-12-1/

Glover, E. (2025, April 1st).  40 Publicly Traded Companies to Know. BuiltIn.  https://builtin.com/articles/publicly-traded-companies

Hall, B. (2024, October 31st). List of HP’s Product Lines: A Comprehensive Overview. Printing Watch.  https://www.printingwatch.com/list-of-hps-product-lines-a-comprehensive-overview

Kenton, W. (2024, July 29th).  Cost-Volume-Profit (CVP) Analysis: What It Is and the Formula for Calculating It. Investopedia.  https://www.investopedia.com/terms/c/cost-volume-profit-analysis.asp