If sensitivity analysis concludes that the largest impact on profits would come from changes in the sales level, then:
A)Fixed costs should be traded for variable costs
B)Variable costs should be traded for fixed costs
C)The project should not be undertaken
D)Additional marketing analysis may be beneficial before proceeding

Question

Quizplus · Accepted Answer

If the sensitivity analysis concludes that changes in sales level have the highest impact on profits, it suggests that there may be uncertainties in the projected sales figures. Conducting additional marketing analysis can help in reducing such uncertainties and provide a more accurate sales projection. Therefore, the best choice is to conduct additional marketing analysis before proceeding with the project.

If Sensitivity Analysis Concludes That the Largest Impact on Profits