Purpose: The main theme of this study is to derive a profit curve by a cubic cost function for nonlinear
CVP analysis. According to the analytical approach to derive a nonlinear profit function in this study, it is
possible with only the existing cost structure to calculate the profit maximization and downtime point sales
unlike the classical CVP analysis. Furthermore, the profit curve by the mathematical model of this study
could serve as a tool to quantify the qualitative evaluation of each stage of the industry life cycle.
Methods: This study followed the mathematical approach from the cubic cost function model of microeconomics,
and using real data of the Bank of Korea
Results: The nonlinear profit function suggested by this study is as follows;
Conclusion: The process and results of this study would be able to contribute not only in practice of nonlinear
CVP analysis required in the management accounting or financial management, but also in cost theory of
microeconomics. Also, since the life cycle of all industries in Korea was verified to the growth or mature
stage, decision makers should pay careful attention to determining life cycle stages and consider the profit
curve by the average variable cost ratio over multi periods.