| Abstract: | The traditional cost-volume-profit (CVP) model assumes the accounting flows follow the accrual accounting model. No distinction is made between accrual cost flows and cash flows. This paper looks at several different cash flow break-even models.One model assumes there is no opportunity to use an accrual accounting taxable loss by other profitable product lines or through a tax loss carryback. When graphed, this model presents a “dog-leg” at the accrual accounting breakeven point. A more general model assumes that an accrual tax loss is usable. When graphed, this model presents a line parallel to the after-tax accrual-based cost line, shifted downward in the amount of the noncash fixed costs. |
