When conducting a worst case scenario analysis, you should assume that:
A) The sales quantity is at the upper end of your expectations.
B) The highest sales price obtainable in the marketplace can be charged.
C) No competition exists in the marketplace.
D) Your variable costs per unit are at the high end of the spectrum of possible prices.
E) Your ﬁxed costs are constant and at the low end of your cost range.

Question

Quizplus · Accepted Answer

When conducting a worst case scenario analysis, it is best to assume that your variable costs per unit are at the high end of the spectrum of possible prices. This ensures that you are prepared for the worst case scenario in terms of profitability and can make necessary adjustments to mitigate potential losses. Assuming that sales quantity is at the upper end of expectations, that the highest sales price can be charged, that no competition exists in the marketplace, or that fixed costs are at the low end of the cost range would all be optimistic assumptions and not representative of a worst case scenario analysis.

When Conducting a Worst Case Scenario Analysis, You Should Assume