Sensitivity Analysis to Determine Changes in Quantity, Prices and Direct Material


Using the following information, perform a sensitivity analysis and indicate to which variable would have the greatest effect on operating income.  Present the complete table.
                                            Base             High          Low
Quantity Produced                  6,000           7,000         5,000
Price                                   $120.00         $130.00     $80.00
Direct Material                       $18.00         $25.00       $12.00
Direct Labor                          $12.00          $30.00        $7.25
Fixed Cost                      $20,000.00      $23,000.00      $15,000.00


The question is about sensitivity analysis for the above data. The calculations have been done for changes in quantity produced, changes in prices of the product, changes in direct material, changes in direct labor and changes in fixed cost.

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