To ascertain whether the accuracy of the variable cost estimate for a project will have much effect on the ﬁnal outcome of the project, you should probably conduct _____ analysis.
A) Leverage.
B) Scenario.
C) Break-even.
D) Sensitivity.
E) Cash ﬂow.

Question

Quizplus · Accepted Answer

Sensitivity analysis is used to analyze the effect of changes in one variable on the outcome of the project. By conducting sensitivity analysis, we can determine how much impact the accuracy of the variable cost estimate will have on the final outcome of the project. It helps in identifying the most critical variables and the extent to which their changes may affect the project's outcome. Thus, sensitivity analysis is the best choice in this case.

To Ascertain Whether the Accuracy of the Variable Cost Estimate