In a company with different business units,individual managers make decisions by changing various assumptions of its budget in order to determine how the modifications would affect the operational and financial results.This is an example of ________.
A) financial statement analysis
B) responsibility accounting
C) sensitivity analysis
D) zero-based budgeting

Question

Quizplus · Accepted Answer

This is an example of sensitivity analysis, which involves changing assumptions in a budget to observe how those changes will affect the company's financial and operational outcomes. Responsibility accounting involves assigning responsibility for specific costs and revenues to individual managers or business units. Financial statement analysis involves examining a company's financial statements to evaluate its performance. Zero-based budgeting involves building a budget from scratch each period, rather than simply making incremental changes to the prior period's budget.

In a Company with Different Business Units,individual Managers Make Decisions