Describe the Process of Sensitivity Analysis and List Some of the Common

question 82

Essay

Describe the process of sensitivity analysis and list some of the common variables that you would expect to analyze.

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Definitions:

Average Cost

the total cost of production divided by the number of units produced, used to evaluate the efficiency of production processes.

Producing Units

Departments or entities within an organization responsible for the creation of goods or provision of services.

Marginal Revenue (MR)

The increase in revenue that results from the sale of one additional unit of a product or service.

Marginal Cost (MC)

The expense associated with the production of an extra unit of a product or service.