Asked by Reshelle Ytuarte on Jun 20, 2024

verifed

Verified

When management runs several CVP analyses with different combinations of estimates this is known as

A) variation analysis.
B) sensitivity analysis.
C) advanced CVP analysis.
D) goal-seek analysis.

Sensitivity Analysis

A technique used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

CVP Analyses

Cost-Volume-Profit Analyses, a financial modelling technique that analyzes how changes in costs and volume affect a company's profits.

Estimates

Approximations or educated guesses used in planning and decision-making, especially in budgeting and forecasting.

  • Apply sensitivity analysis in CVP to assess changes in assumptions.
verifed

Verified Answer

RM
Rajan MishraJun 22, 2024
Final Answer :
B
Explanation :
This scenario is describing sensitivity analysis, which involves testing different combinations of estimates to see how they impact the results of a CVP analysis. Variation analysis is not a commonly used term in managerial accounting, advanced CVP analysis is a broad term that could refer to several different techniques, and goal-seek analysis involves setting a target and working backwards to determine what inputs are necessary to achieve that target.