When Performing a Sensitivity Analysis, If the Selling Price Per

question 90

Multiple Choice

When performing a sensitivity analysis, if the selling price per unit is increased, then the ________.

• A) per unit fixed administrative costs will increase
• B) per unit direct materials purchase price will increase
• C) total volume of sales will increase
• D) total costs for sales commissions and other nonmanufacturing variable costs will increase

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Definitions:

Inventory Costing Method

Techniques used to assign costs to inventory and cost of goods sold, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Gross Profit

The financial metric calculated by subtracting the cost of goods sold from net sales, representing the profit from selling goods before deducting operating expenses.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated using a specific inventory valuation method.

FOB Destination

A shipping term indicating that the seller retains ownership and responsibility over the goods until they are delivered to the buyer's location, at which point the buyer takes over.