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This commentary examines the claims regarding the use of lognormal distributions in cost-volume-profit (CVP) analysis, specifically addressing the implications of these assumptions.

March 18, 2026The Accounting Review

CVP Analysis under Uncertainty -- A Log Normal Approach: A Comment.

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ALAmy Hing-Ling LauUniversity of Hong Kong HLHon-Shiang LauState University of Management

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Comment critiques lognormal assumptions in CVP analysis, suggesting reduced model richness and complexity issues.

Key Points

This commentary examines the claims regarding the use of lognormal distributions in cost-volume-profit (CVP) analysis, specifically addressing the implications of these assumptions.
Analysis of the primary variables in CVP equations.
Critique of lognormal distribution assumptions based on theoretical grounds.
Discussion of the consequences of using lognormal distributions for subtractive operations.
Lognormal distributions simplify multiplicative operations, but complicate subtractions.
Grouping of primary variables is necessary, which diminishes the model's complexity and richness.

Cite This Study

Lau et al. (1976) studied this question.

synapsesocial.com/papers/69ba424e4e9516ffd37a26c6 https://doi.org/10.2308/tar-4503083

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CVP Analysis under Uncertainty -- A Log Normal Approach: A Comment.

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Cite This Study

CVP Analysis under Uncertainty -- A Log Normal Approach: A Comment.

Discussion

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Implication

Key Points

Cite This Study

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