To Get a Feel for the Impact on Profits of Various

question 55

Multiple Choice

To get a feel for the impact on profits of various changes in costs and volume levels,management should perform:

• A) cost benefit analysis
• B) sensitivity analysis
• C) cost analysis
• D) profitability analysis

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Definitions:

Purchases Account

An account used in accounting to track all purchases of goods and materials that a business intends to resell.

Cost Of Goods Purchased

The total expense incurred by a company to buy the goods it has purchased for resale, including shipping and handling fees.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, highlighting the efficiency of a company in managing its operations and costs.

Operating Expenses

Costs incurred during the normal operations of a business, excluding the cost of goods sold.