The important advantages are as follows:
1. Total cost, Variable cost and fixed cost can be determined.
2. B.E. output or sales value can be determined.
3. It shows cost and profits on different volumes of production. Planning and forecasting are made more effective.
4. Cost volume and profit relationship can be studied, and they are very useful to the managerial decision-making.
5. the best product mix can be selected.
6. It is useful for forecasting plans and profits.
7. It facilitates inter-firm comparison of profitability.
8. Total profit can be calculated.
9. It provides information in a more easily understandable form than the profit and loss account.
10. It is helpful for cost control
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