Question

Les is concerned that his variable cost per unit projection for a project may not be reliable. Which type of analysis will best help him determine the effect that an incorrect variable cost estimate could have on the final outcome of the project

Answer 1

Answer:

Cost Volume Profit Analysis (CVP)

Explanation:

The Cost Volume Profit Analysis (CVP) shows the change in profit or loss as a result of change in the (1) cost structure (variable and fixed costs), (2) sales revenue and (3) level of activity.

Thus this would be helpful to Les in determining the effect that an incorrect variable cost estimate could have on the final outcome of the project by altering the cost structure.