If a 20% reduction in forecast sales would not extinguish a project's profitability, then sensitivity analysis would suggest:
A) deemphasizing that variable as a critical factor.
B) requiring a more detailed sales forecast.
C) that the initial sales forecasts were inflated.
D)reallocating fixed costs to this product.

Question

Quizplus · Accepted Answer

A 20% reduction in forecast sales that would not extinguish a project's profitability means that the project is not overly sensitive to changes in sales. Therefore, there is no need to emphasize that variable as a critical factor. Instead, the focus should be on other variables that are more critical and require more detailed analysis.

If a 20% Reduction in Forecast Sales Would Not Extinguish