Answer to the question no: 1
(1)Answer: CVP means cost volume and profit analysis that means what amount or unit of sales that we have to sale that make a revenue to makeup all expenses and create profit that means sales revenue higher than cost. A volume of sales that we have to sale to makeup organization cost and that volume or revenue must be higher than cost because to gain profit's what amount we need to sale to make profit that will higher than our cost this analysis is called CVP analysis.
Answer to the question no: 2
(2)Answer: Margin of safety means (Actual sales-Break even sales).So it means an amount sales that is more than break even unit that create a profit for the organization because we know up to break even point all unit of sales maintain profit position so this position is a safe position and more margin of safety is better because it will create more safe position to make profit for any organization.
Answer to the question no: 3
(3)Answer: If operating leverage is high, a small percentage increase in sales can produce a much larger percentage increase in net operating income that's why degree of operating leverage show the sensitivity between net operating income and sales.
For example: If sales increase 5% and DOL 9 times. Then NOI will increase by=5×9=45%
So, sales increase an small amount but DOL affect net operating income and it will increase 45%.If DOL increase or high with a little amount of sales increase it will make a huge percentage of Net operating income increase. That's why degree of operating leverage show the sensitivity.