Question: 1. What is forecasting risk? In general, would the degree of forecasting risk be greater for a new product or a cost-cutting proposal? Why? 2.

1. What is forecasting risk? In general, would the degree of forecasting risk be greater for a new product or a cost-cutting proposal? Why?

2. What is the essential difference between sensitivity analysis and scenario analysis?

3. A coworker claims that looking at all this marginal this and incremental that is just a bunch of nonsense, saying, "Listen, if our average revenue doesn't exceed our average cost, then we will have a negative cash fl ow,

and we will go broke!" How do you respond?

4. At one time at least, many Japanese companies had a "no-layoff" policy (for that matter, so did IBM). What are the implications of such a policy for the degree of operating leverage a company faces?

5. Airlines offer an example of an industry in which the degree of operating leverage is fairly high. Why?

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