Applicability of the CVP Model for the Indian Sugar Sector
Mihir Dash *
Alliance University, Bangalore, India.
*Author to whom correspondence should be addressed.
Abstract
This study examines the applicability of the Cost-Volume-Profit (CVP) model empirically for Indian sugar manufacturing companies using linear and quadratic regression.
The results of the study indicate that the linear CVP model is more appropriate than the quadratic CVP model for Indian sugar manufacturing companies. However, the slope coefficients were not correlated with profitability, which is contrary to the predictions of the model; they were positively correlated with mean and standard deviation of Power & Fuel Expenditure and negatively correlated with mean Employee Expenditure. This suggests that a quadratic regression of TR on the different components of total cost may have been more appropriate.
Keywords: Cost-Volume-Profit (CVP) model, linear and quadratic regression