SCENERIO: Your are an IT Project Proposal Manager. You have to sell your project to the senior...

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SCENERIO: Your are an IT Project Proposal Manager. You have to sell your project to the senior funding management. You have been directed to use only 1 form of analysis to justify your costs. As you read the text and study the topic think about the following (do not write this part): compare and contrast the use of cost-volume-profit analysis, break-even analysis, and contribution margin analysis.

WRITING: In a four paragraph essay using theory (1 cite of text, 1 cite of a recent research article) and your experience: Take and justify a position as to which 1 of the 3 types of analysis above are the best approach for your presentation to management for determining if an IT project should be funded and launched.

Robert · Accepted Answer

Cost-Volume-Profit Analysis: Cost volume profit analysis is used to determine, the impact of costs and volume on operating and net income of 
the company. Major assumptions are that, the costs are classified in terms of fixed or variable. Sale price and variable price remain constant 
though there is a change in volume.  
Break-even Analysis: A level where the revenue earned and the cost incurred are one and the same. Hence it's a no gain no loss point. Every 
manager is concerned about the Break – Even point and plans to sell the minimum number of units to be sold to reach the breakeven point. 
Contribution Margin: Contribution margin is arrived at by deducting variable cost of revenue.
Comparing CVP, BEs And CM 
Sl. 
No 
Cost-Volume-Profit Analysis (CVP) Break-Even Analysis (BE) Contribution Margin Analysis (CM) 
1 A study on the impact of the output 
volume towards revenue generation cost 
and profit.  
A study on the concept of no gains no loss 
position (Indvestopedia, 2013) . Break-Even 
Point (BEP) is a stage where revenue 
generated and cost incurred is same.

SCENERIO: Your are an IT Project Proposal Manager. You have to sell your project to the senior funding management. You have been directed to use only 1 form of analysis to justify your costs. As you...

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