THE COST-VOLUME-RESULT MODEL IN SMALL BUSINESSES IN THE AGRICULTURAL AND LIVESTOCK SECTOR: A STUDY APPLIED AT THE SANTA FILOMENA AVIARY-BENGUELA, ANGOLA

Abstract

This study applies the Cost-Volume-Profit (CVP) model to a small agricultural enterprise in Angola, specifically at Santa Filomena Poultry Farm, located in Benguela Municipality. The main objective is to demonstrate how CVP analysis constitutes a fundamental tool for modern management in determining optimal production volumes that ensure recovery of total operating costs. The methodology combines qualitative and quantitative methods, including documentary analysis (balance sheets, income statements, cost control maps), semi-structured interviews with managers and accountant, and direct observation during 30 hours across five visits. Results show the company is profitable, with a cost structure of 85% variable costs and 15% fixed costs. Calculated break-even points are: eggs (66,278,829.20 Kz / 4,909 boxes), chickens (12,624,538.90 Kz / 8,416 units), and feed (78,903,368.10 Kz / 7,514 bags). Total contribution margin of 69,475,865.12 Kz exceeds fixed costs of 36,958,337.62 Kz, generating operating profit of 32,517,527.50 Kz. The 44% safety margin indicates moderate operational robustness with room for optimization. The investigation identifies critical gaps: absence of formal cost planning and control system, no variance analysis, and lack of activity-based costing. Recommendations include implementing an integrated information system based on CVP model, adopting activity-based costing, developing formal budgeting, and conducting periodic sensitivity analysis. The study contributes to literature on cost management in small agricultural enterprises in African contexts, demonstrating CVP model applicability and providing practical guidance for improving profitability and business sustainability.