Cost-Volume–Profit Analysis for Micro Entrepreneurs

AKSB 903 (Beirut) and via video conference

Presented by: Dr. Marcin Osikowicz
Cracow University of Economics

Abstract

Micro-entrepreneurs usually do not keep full books of accounts. Instead, they usually keep records limited to tax purposes, sometimes supplemented by auxiliary records, for example, to control receivables and payables. In addition, usually micro-entrepreneurs are fully and individually responsible for the debts of the enterprise. All this makes understanding basic accounting principles a problem for them. The CVP analysis requires the micro-entrepreneurs to know the concepts of revenues and costs, taking into account the accrual basis. If this condition is met, you can start estimating fixed and variable costs, which is the basis of the CVP analysis. From there, it’s only a step to apply the revenue function and the cost function to breakeven point forecasting and similar applications.