What key insights does a cost-volume-profit (CVP) analysis provide?

Cost-volume-profit (CVP) analysis is a crucial tool in management accounting that helps organizations understand the interplay between costs, sales volume, and profitability. One of the key insights provided by CVP analysis is how changes in costs and volume can impact operating income and net income. This understanding is vital for decision-making, as it allows managers to determine the break-even point, adjust pricing strategies, and evaluate the profitability of different products or services.

By analyzing fixed and variable costs alongside projected sales volumes, businesses can forecast their profit or loss under varying scenarios. This insight enables organizations to make informed decisions about scaling operations, managing resources, or adjusting sales targets to achieve desired financial outcomes. Additionally, CVP analysis helps identify the margin of safety, which reflects the risk of potential sales declines, and guides strategic planning accordingly.

The other options, while relevant to broader financial management, do not capture the comprehensive implications that CVP analysis has on understanding operating and net income in relation to cost and volume changes. Hence, option B accurately encapsulates the primary essence of what CVP analysis aims to reveal.