A Case Method Approach of Teaching How Cost-Volume-Profit Analysis is Connected to the Flexible Budgeting Process and Variance Analysis Susan Machuga University of Hartford Carl Smith University of Hartford To start a successful business, students need to understand the steps necessary to achieve their desired profits. While Managerial textbooks teach each step independently, we demonstrate how these steps are integrated. We present a Multi-Disciplinary Case-Method approach to teaching Cost-Volume-Profit (CVP) Analysis. Students use their own assumptions to simulate a real-life business startup analysis to calculate the number of units necessary to achieve their desired profits. Students are required to build upon their CVP analyses to develop budgets necessary for planning and control purposes. Finally, students prepare a Flexible Budget demonstrating the importance of distinguishing between activity and revenue/spending variances. INTRODUCTION “We first present an alternative, more comprehensive teaching approach, for Cost-Volume-Profit (CVP) analysis from the commonly used approach which simply teaches students how to use a series of equations to solve various questions related to CVP analysis, in which unit selling price, total fixed costs, and unit variable costs are assumed to remain constant (Garrison et al., 2010; Choo and Tan, 2010). We use a multi-disciplinary approach in the context of a realistic case-analysis. We believe this approach offers useful insights and provides a useful learning tool for students pursuing an advanced Master’s Degree.” (Machuga, 2012). This case requires students to: (a) make assumptions about cost behavior in a dynamic and interactive way, and (b) research a variety of marketing issues for the proposed business that simulates a real life business situation, and (c) use the information from their CVP analysis for planning purposes, applying what they typically learn when they read about budgeting, and (d) compare the results of their business venture using the Income Statement prepared based on their planned level of sales volume to the results that should have occurred based on the actual level of sales volume, as well as the actual results we provide in the case. This allows students to see how budgets are used to develop goals, as well as to determine if actual results were achieved. This paper’s approach emphasizes the importance of CVP analysis and how it ties directly into planning and control processes management must take in order to start a potentially successful business. More importantly, we show students the importance of these key practical yet very relevant management-accounting tools, all done in one integrative setting instead of teaching those concepts separately. 178 Journal of Accounting and Finance vol. 13(6) 2013