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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.
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