Does Cost Stickiness Affect CVP Analysis?

In recent years, with the changing of the economic environment, many industries in our country no longer have the low cost advantage, but gradually march into the era of high cost, which is especially obvious in the manufacturing industry. Facing shrinking profit margins and increasing cost pressure, for such a world-class manufacturer in China, the cost is the lifeblood of manufacturing enterprises and cost management in manufacturing enterprises is especially important. The traditional theory of cost behavior assumes that the relationship between costs and the activity level is a linear. This means that the marginal cost variation has nothing to do with changes in business direction. A lot of cost and management accounting tools are based on this assumption, and widely used in the enterprise operation and management. However, a lot of domestic and overseas studies have shown that the change between cost and business is asymmetric. In other words, costs increase more with activity increase than they decrease in response to equivalent activity decreases. This isn’t consistent with the traditional theory of cost behavior, and may has impacts on the cost and management accounting tools, and then affects the accuracy of information for decision-making. Currently, domestic scholars have done some research about cost stickiness, but researches on the influence of cost stickiness on cost and management accounting tools is little. So, this article discusses whether cost stickiness influence CVP analysis and the difference of this effect between different enterprises take certain theoretical and realistic significance.This article takes manufacturing listed companies from A stock of Shanghai and Shenzhen as samples for empirical research, and the results indicate that:(1) Conditional on the realized sales level, cost stickiness has negative effects on CVP analysis, that is to say, because of the existence of cost stickiness the costs the standard CVP analysis reflects are flat resulting in overestimating earnings. The effect exists both in state-owned and non-state-owned enterprises, but the difference is not obvious;(2) Asset and employee intensity will enhance the effects of cost stickiness on CVP analysis. This phenomenon exists in both state-owned and non-state-owned enterprises, but the difference is not obvious;(3) Firm size will weaken the effects of cost stickiness on CVP analysis, and this phenomenon is obvious in non-state-owned enterprises.