Journal of Economics and Business

ISSN 2615-3726 (Online)

ISSN 2621-5667 (Print)

Published: 02 December 2019

Joint Products CVP Analysis – Time for Methodical Review

Enyi Patrick Enyi

Babcock University, Nigeria

Download Full-Text Pdf


Pages: 1288-1297

Keywords: Contribution Margin Ratio, Weighted Contribution Margin Ratio, Reversed Contribution Margin Ratio, Breakeven Point, Cost-Volume-Profit Analysis


This paper compares the effectiveness of the Weighted-Contribution-Margin (WCM) and the Reversed-Contribution-Margin-Ratio (RCMR) in multiproduct Cost-Volume-Profit analysis applications. Using a rehashed-activity data and the OLS regression to analyse six joint-products over 42 weeks operation, it was found that the WCM lacks analytical efficiency and generates suboptimal products mix because it ignores the inverse relationship between a product’s contribution-margin-ratio (CMR) and its breakeven point (BEP). These deficiencies present potential resource allocation problems during periods of low capacity utilization periods. The paper recommends the use of the RCMR which factors the tradeoff effects of the CMR/BEP in its measurement.


  1. Blocher, E., & Chen, K. H. (2004). The ALLTEL  Pavilion Case: Strategy and CVP Analysis. Issues in Accounting Education,  19(4), 555-565. Retrieved 2 23, 2019, from
  2. Cheung, J. K., & Heaney, J.  (1990). A contingent‐claim integration of cost‐volume‐profit analysis with  capital budgeting*. Contemporary Accounting Research, 6(2), 738-760.  Retrieved 2 23, 2019, from
  3. Choo, F., & Tan, K. B. (2011).  An Income Statement Teaching Approach for Cost-Volume-Profit (CVP)Analysis by  Using a Company’s CVP Model. Journal of Accounting and Finance, 11(4), 23-36.  Retrieved 2 23, 2019, from
  4. Clancy, D. K., & Madison, T. F.  (1997). Cost-Volume-Profit Analysis and Changing Costs: Reconciling Theory and  Practice. The Journal of Cost Analysis, 14(2), 89-108. Retrieved 2 23,  2019, from
  5. Collins, D., Chan, L., & Román,  F. J. (2011). An Empirical Investigation of the Relationship Between Profit  Margin Persistence and Firms’ Choice of Business Model: Evidence from the US  Airline Industry. Journal of Management Accounting Research, 23(1),  37-70. Retrieved 2 22, 2019, from
  6. Enyi, P. E. (2012). Removing the  constraining assumption of no joint products in Breakeven Analysis. International  Journal of Contemporary Research (AIJCR), 2(5), 204-209.
  7. González, L. E. (2001). Multiproduct  CVP analysis based on contribution rules. International Journal of  Production Economics, 73(3), 273-284. Retrieved 2 23, 2019, from
  8. Guidry, F., Horrigan, J. O., &  Craycraft, C. (1998). CVP Analysis: A New Look. Journal of Managerial  Issues, 10(1), 74. Retrieved 2 23, 2019, from
  9. Himme, A. (2018). Cost-volume-profit  (CVP) analysis. The Business & Management Collection. Retrieved 2  23, 2019, from
  10. Ihemeje, J. C., Okereafor, G., &  Ogungbangbo, B. M. (2015). Cost-volume-profit Analysis and Decision Making in  the Manufacturing Industries of Nigeria. Journal of international business  research, 1(1), 7-15. Retrieved 2 23, 2019, from
  11. Jaedicke, R. K., & Robichek, A.  A. (1964). Cost-Volume-Profit-Analysis under Conditions of Uncertainty. Accounting  Review, 39(4), 917-926.
  12. Jakupi, S., Statovci, B., &  Hajrizi, B. (2017). Break-Even Analysis as a powerful tool in Decision-Making.  International Journal of Management Excellence, 9(3), 1169-1171.  Retrieved 2 23, 2019, from
  13. Kee, R. (2007). Cost-Volume-Profit  Analysis Incorporating the Cost of Capital. Journal of Managerial Issues,  19(4), 478. Retrieved 2 23, 2019, from
  14. Kim, S. H. (2015).  Cost-Volume-Profit Analysis for a Multi-Product Company: Micro Approach. International  Journal of Accounting and Financial Reporting, 5(1), 23-35. Retrieved 2  23, 2019, from
  15. Lau, A. H.-L., & Lau, H.-S.  (1987). CVP analysis with stochastic price-demand functions and  shortage-surplus costs*. Contemporary Accounting Research, 4(1),  194-209. Retrieved 2 23, 2019, from
  16. Magee, R. P. (1975).  Cost-Volume-Profit Analysis, Uncertainty And Capital-Market Equilibrium. Journal  of Accounting Research, 13(2), 257-266. Retrieved 2 23, 2019, from
  17. Mehar, A. (2005). The financial  repercussion of cost, revenue and profit: an extension in the BEP and CVP  analysis. Applied Financial Economics, 15(4), 259-271. Retrieved 2 23,  2019, from
  18. Navaneetha, B., Punitha, K., Joseph,  R. M., Rashmi, S., & Aishwariyaa, T. S. (2017). An Analysis of Cost Volume  Profit of Nestlé Limited. Management and Administrative Sciences Review, 6(2),  99-103. Retrieved 2 23, 2019, from
  19. Simshauser, P., & Ariyaratnam,  J. (2014). What is normal profit for power generation. Journal of Financial  Economic Policy, 6(2), 152-178. Retrieved 2 23, 2019, from
  20. Stefan, D. (2012). Developing a  Cost-Volume-Profit Model in Production Decision System Based on MAD Real  Options Model. Procedia Economics and Finance, 3, 350-354.  doi:10.1016/S2212-5671(12)00163-3
  21. Yunker, J. A., & Yunker, P. J.  (2003). Stochastic CVP analysis as a gateway to decision-making under  uncertainty. Journal of Accounting Education, 21(4), 339-365. Retrieved  2 23, 2019, from

About Us

The Asian Institute of Research is an online and open-access platform to publish recent research and articles of scholars worldwide. Founded in 2018 and based in Indonesia, the Institute serves as a platform for academics, educators, scholars, and students from Asia and around the world, to connect with one another. The Institute disseminates research that is proven or predicted to be of significant influence for the general public.

Contact Us

Please send all inquiries to the email:

Business Address:

5th Floor, Kavling 507, Fajar Graha Pena Tower, Jl. Urip Sumohardjo No.20, Makassar, Indonesia 90234

Copyright © 2018 The Asian Institute of Research. All rights reserved

Stay Connected

  • Instagram - Black Circle
  • Facebook - Black Circle
  • LinkedIn - Black Circle