Sensitivity Analysis Sensitivity analysis is a "what if" proposition. It answers questions about what may happen if major assumptions change or if certain predicated events do not occur. The "what if" feature allows 3 the manager to plan for a variety of possibilities in different scenarios. 10 As the manager of the Radiology Department, here are the assumptions: 1 There are 400 X-Rays completed and generate revenue of $75 each. 2 Variable costs amount to $45 per x-ray. 3 Fixed Costs equal $ 2,200 A. What is the Contribution Margin? B. What is the Operating Income? A B C D E F G H Target Operating Income Using the Contribution Margin Method 7 A target operating income contribution computation allows the manager 8 to determine how many procedures must be performed in order to yield a 9 particular operating income. 11 The formula is compute this is: 3 N = Fixed Costs + Target Operating Income Contribution Margin Per Unit 16 Assumptions: 3,800 150 A. Desired (target) operating income = $ B. Revenue per Procedure C. Variable Cost Per Unit D. Total Fixed Cost $ 75 3,000 24 Calculate the Target Operating Income Sheet1 Sheet2 Ready O Type here to search te (intel