A "what-if" technique used to see what impact a change in an underlying variable has on the answer is a:
A) break-even point.
B) cost-volume-profit analysis.
C) indifference point.
D) degree of operating leverage.
E) sensitivity analysis.

Question

Quizplus · Accepted Answer

The technique described is sensitivity analysis, which involves changing one variable at a time to see the impact on the answer. Choice A (break-even point) and choice C (indifference point) are specific terms within cost-volume-profit analysis. Choice B (cost-volume-profit analysis) involves analyzing the relationships between cost, volume, and profit. Choice D (degree of operating leverage) is a measure of how much a company's operating income will change based on changes in sales. Therefore, E is the best choice.

A "What-If" Technique Used to See What Impact a Change