At a company with different business units, individual managers make decisions by changing various assumptions of their budget in order to determine how the modifications would affect the operational and financial results. This is an example of:

Question

Quizplus · Accepted Answer

This scenario describes sensitivity analysis, which involves changing certain variables or assumptions in a budget or financial model to assess the impact on the results. This helps managers to identify risks and opportunities and make more informed decisions. Financial statement analysis involves reviewing historical financial data, responsibility accounting assigns accountability to individual managers for specific areas of a business, and zero-based budgeting requires managers to justify every expense from scratch rather than using previous budgets as a starting point.

At a Company with Different Business Units, Individual Managers Make