Instructions
Making a profit in the highly competitive and challenging automotive industry is no easy task for U.S. auto manufacturers like the Ford Motor Company. The automotive sector is characterized by intense competition, rapidly changing consumer preferences, high production costs, and significant investments in research and development. Understanding the relationship between costs, profits, and sales volume is important for businesses like Ford to make sound business decisions.
In an initial post of at least 200 words, explain how Ford can use CVP analysis to make informed business decisions related to sales, costs, and profits. In your post,
Explain the difference between fixed costs and variable costs.
Provide an example of a fixed cost and a variable cost for Ford.
Explain the role of contribution margin in CVP analysis.
Discuss at least three ways Ford can use CVP analysis for managerial decision making.
Describe the margin of safety and discuss how it might influence Ford’s managerial decision making and performance analysis.