Cost-volume-profit analysis The cost-volume-profit analysis (CVS) is used by companies to predict the future of s business using past experiences. A CVS analysis is also important to entrepreneurs when making various investment decisions, in this case, the expansion of Yalla Momos. To conduct the performance analysis for Yalla Momos, we need to calculate the break-even point for the company. To calculate the break-even point for the company, where total revenue is equal to the total cost, that is no profit or loss made. Using the contribution margin method: Thus, from the above calculations, Yalla Momos has to make sales of AED291428.571 in the year to sustain the business. Goel estimates to achieve net revenue of AED72700 while the depreciation cost is expected to rise to AED19000. We shall use the CVS analysis in order to be able to find the number of sales needed to achieve the target revenue. Required sales= (target income + fixed costs)/ contribution margin ratio Thus; S= (727700+223000)/ 70% =AED1358142 For Goel to achieve his target revenue, Yalla Momos has to make sales of AED1358142. However, when making critical management decisions, organizations should calculate the margin of safety to evaluate how far sales could change before a company makes a loss. According to the above calculations, Yalla Momos has a safety margin of 78.54% before it can make a loss. Mr. Goel targets to increase his revenue from AED504000 to AED727700 in the coming year. To meet the target, the company has to make sales of AED1358142. However, the three branches that Mr. Goel operates currently can make sales of 151200, where two of the branches are not productive. On the other hand, the company has a safety margin of 78.54% before it could make a loss. It is hard for the three branches to achieve the targeted revenue even with increased concentration. Hence, referring to the above information, Mr. Goel should open another Yalla Momos branch. If the branch does not turn to be a success, the company has a huge margin of safety and could still be sustainable. Relevant Cost in Diversification By establishing Dinefest, Mr. Goel shall introduce a new product in the existing Momos market. During the product development process, the company will have to incur some costs. There are various costs that Mr. Goel must consider before developing a new product line. To begin with, Mr. Goel must analyze the financial health of the company. He will do so by analyzing the financial statements of Yalla Momos. Financial statements include analyzing the cash flow statements, income statements, and balance sheets. The costs most relevant in these statements are assets, liabilities, sales revenue, amount of income, and operating costs. By use of a balance sheet, Mr. Goel can determine the current book value of the company. A balance sheet calculates the value of a company by calculating the assets which are, total liabilities added to shareholders’ equity. Income statements compute the operating costs, depreciation, net income, and income per share. It is critical that Mr. Goel also evaluates the company’s margin of safety before commencing a new product development process. Evaluation of financia