Managers can use CVP relationships to conduct sensitivity analysis.

Question

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Managers can change the variables such as sales volume, price, and costs to analyze how changes affect the company's profits and break-even point. This is known as sensitivity analysis. CVP relationships provide a way to understand how these variables are interconnected and how changes to one variable can affect the others. Therefore, managers can use CVP relationships to conduct sensitivity analysis.

Managers Can Use CVP Relationships to Conduct Sensitivity Analysis