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Dear Sir,
Its very tough to understand tax impact on sansitivity analysis. For example when we think about Fixed cost, sales, contribution, or variable cost what will be the impact on tax during sensitivity calculation. Would you please explain with example how to solve these types of question in exam.
Thanks
Hi there – there is no need to worry here really. Sensitivity analysis looks at how changes in an independent variable affect a dependent variable.
Tax isn’t independent – it will change according to profit total – so in my experience you shouldn’t see any questions involving tax in a CIMA P1 sensitivity calculation.
Hope that helps.
Many Thanks
Cath
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