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Several important assumptions underline the Cost-Volume-Profit analysis are often help focus your analysis of sales and costs. A common application of Cost-Volume-Profit analysis is as a tool to forecast sales, costs and income.

Assume that you are actively searching for a job. Write (i.e. discuss) about several assumptions you will personally make relating to your personal expected revenue (i.e. salary) and also write (i.e. discuss) about several assumptions you will personally make relating to your personal expected costs for the first year of your new job.

Given Answer

For the analysis I am doing a CVP analysis. What the CVP stands for is cost-volume-profit analysis. What is it going to cost me to work what I will make and what is my volume. For this example it is for the first year of my new job so since I am searching for a job I must outline what is a livable wage. I believe that a livable wage here in California is about 20 dollars an hour full time. As for revenue assumptions the business I apply for must provide payment and look to stay in business for the foreseeable future. So in this case I can see my salary as my expected revenue, so if I earn 20 dollars an hour full time that’s about 160 dollars a day without tax. Some costs will be fixed and some costs will vary such as tax deductions and so forth. Fixed costs are costs that do not change no matter how much I make. For example my fixed cost in this situation would be shelter, food, and family. There are many other proponents of fixed costs like fuel cost, overtime rate, family costs. Another cost assumptions I can make is that is the all selling price is constant. The price of this product my job will not change no matter what happens. The only thing that will change is the likelihood I get the job if it is bombarded with applications. My job has to cover my work related expenses. For example my office space, my electricity, my office chair, my computer programs and other work related expenses. These are all cost assumptions that must be met in my first year to work in a livable situation. Another cost that will be incurred for my first year working at this business would be my attire. I will have to go and buy shirts and pants along with shoes to look professional for this job. This will cost me hundreds of dollars but this cost is a one-time cost. What makes this cost interesting is that this cost will probably be the most efficient cost of the job process.