When conducting a worst-case scenario analysis, you should assume that:
A) The sales quantity is at the upper end of your expectations.
B) The highest sales price obtainable in the marketplace can be charged.
C) No competition exists in the marketplace.
D) Your variable costs per unit are at the high end of the spectrum of possible prices.
E) Your fixed costs are constant and at the low end of your cost range.

Question

Quizplus · Accepted Answer

Worst-case scenario analysis involves preparing for the most challenging or severe outcome. Assuming that variable costs per unit are at the high end of the spectrum of possible prices is consistent with preparing for a scenario where expenses are higher than expected, which would negatively impact profitability. This approach helps in planning for difficult financial conditions.

When Conducting a Worst-Case Scenario Analysis, You Should Assume That