Sensitivity analysis shows how the CVP model will respond to changes in the original variables or even model assumptions.

Question

Quizplus · Accepted Answer

Sensitivity analysis in the context of the Cost-Volume-Profit (CVP) model evaluates how changes in the model's assumptions or variables, such as costs, prices, or volumes, affect the outcomes, helping in understanding the robustness and risks associated with decisions.

Sensitivity Analysis Shows How the CVP Model Will Respond to Changes