To get a feel for the impact on profits of various changes in costs and volume levels,management should perform:
A) cost benefit analysis
B) sensitivity analysis
C) cost analysis
D) profitability analysis

Question

Quizplus · Accepted Answer

Sensitivity analysis is the most appropriate choice to understand the impact on profits of various changes in costs and volume levels. Sensitivity analysis helps in analyzing the effect of changes in variables such as costs and volume on profits. It provides a range of outcomes based on different scenarios, which helps management in making better decisions. Cost benefit analysis, cost analysis, and profitability analysis are useful in their own contexts, but they do not specifically address the impact of changes in costs and volume levels on profits.

To Get a Feel for the Impact on Profits of Various