THE APPLICATION OF COST VOLUME PROFIT ANALYSIS IN THE SOUTH AFRICAN MINIBUS TAXI INDUSTRY

Abstract

The rapid and strong flow of economic development and competition has compelled businesses in both the informal and formal sectors to be competitive in every way. Cost volume profit analysis (CVP) has become an important management accounting principle in this rapid and strong economic flow. This is because cost volume profit analysis is a management accounting principle that may be used in planning, monitoring, and decision-making by forcing minibus taxi owners to evaluate future possibilities, anticipate openings in terms of opportunities and restructuring, and detect future risks. The purpose of this research paper is to investigate how minibus taxi owners in the informal sector apply CVP as a management accounting principle tool in operating their minibus taxi business. This research paper used a quantitative research methodology in the form of an online questionnaire to gather data from a census of 500 minibus taxi owners situated in the Emfuleni Local Municipality. This is a cross-sectional research paper with a location restriction. Data were collected in 2021. The data collection was restricted to the online environment, because of the COVID pandemic restriction. Following data collection, the information was synthesized into an excel file, a conformity check was performed, and data cleansing was completed. The Statistical Package for the Social Sciences version 27.0 software package was used to analyses the data. The results were displayed using descriptive tools such as pie charts and bar charts. The results of these descriptive tools show that most minibus taxi owners do not apply cost volume profit analysis when running their minibus taxi industry. Lastly, the research paper concludes by providing recommendations on how minibus taxi owners may apply CVP to their minibus taxi business.

Keywords: cost volume profit analysis - costs - volume - profits - minibus taxi industry.