Cost- Volume profit analysis is a method used to calculate changes in total cost

Cost-
Volume profit analysis is a method used to calculate changes in total
cost based on the variation of sales volume (Heuls & Weber, 2021).
It is an old traditional way and considered a basic and a simple tool
for calculating profit in managerial accounting. CVP is known to be
suitable for short-term production operations of manufacturers with a
long cycle in the market because producing habits, fixed, and variable
costs of these firms are mostly constant and the change of costs per
unit and volume is not affected widely as stated in Guo et al. (2022)
article.
There
are several assumptions that managers use the CVP analysis based on.
The first assumption assumes that the relationship between cost and
revenue is linear, in other words revenue is changed and affected by
affecting cost. Another assumption is that selling prices are constant
and must not change to analyze using CVP. Thirdly, all costs are
categorized into 2 types of: variables which can change continuously
based on activities, and fixed costs that are unchangeable such as lease
cost, utility and salaries (Said, 2016).
As
I have stated above, CVP analysis can be useful for short-term
activities but, there many limitations on it. For example, there are
types of costs that cannot be classified in the third assumption
categories, such as depreciation, as it is considered a cost that is
incurred in the long run. Also, there are some assets that have mixed
cost of both variable and fixed such as telephone bill which can have a
fixed amount that should be paid, and a variable based on calls made.
Another limitation is that fixed costs can change into variables in the
long term, rent expenses as instance are fixed but can change after a
period.
Question:
How
can managers encounter limitations made of CVP analyses and change it
to a more useful tool in the decision making and long run?