Final answer:
Managers in service and not-for-profit organizations apply CVP analysis to make better decisions regarding pricing, cost control, and revenue generation.
Step-by-step explanation:
In service and not-for-profit organizations, managers apply Cost-Volume-Profit (CVP) analysis to understand how changes in costs, volume, and prices affect their financial performance. CVP analysis helps these organizations make better decisions regarding pricing, cost control, and revenue generation.
For example, in a service organization like a hospital, managers use CVP analysis to determine the break-even point and make decisions about service offerings and pricing strategies. They consider the variable costs associated with providing different services and the expected volume of patients to evaluate the financial feasibility of these services.
Similarly, in a not-for-profit organization like a charitable organization, CVP analysis helps managers plan fundraising campaigns and evaluate the impact of different cost structures on achieving their mission. They can analyze how changes in fundraising costs, donation levels, and program expenses affect the organization's financial sustainability.