TB MC Qu. 09-28 An example of goal-seek analysis...

An example of goal-seek analysis is determining

Question

TB MC Qu. 09-28 An example of goal-seek analysis...

An example of goal-seek analysis is determining

BlackTom AI · Accepted Answer

In this question, we are asked to identify an example of goal-seek analysis in a managerial accounting context.
Option 1: the net present value. While NPV is a key metric in capital budgeting, goal-seek analysis is not about solving for a target NPV directly; it’s about adjusting an input to reach a desired output, which NPV calculations typically address through sensitivity or scenario analysis rather than a goal-seek setup.
Option 2: the internal rate of return. IRR is another capital-budgeting criterion used to evaluate projects, representing the discount rate that makes NPV zero. It is not a typical target outcome that you solve for by adjusting a single variable; rather, IRR is itself a result of cash-flow assumptions, not a direct goal-seek exercise.
Option 3: the amount of sales to break even. This aligns with goal-seek analysis because you set a target (break-even profit equals zero) and solve for the sales level (an input variable) required to achieve that target output. In practice, goal-seek/what-if analysis iterates on sales volume (or price) to hit the desired financial result, such as zero profit.
Option 4: the accounting rate of return. ARR is a conventional profitability measure based on accounting income and investment base. Like NPV and IRR, ARR calculations are not typically about solving for an input to reach a stated target, so it does not exemplify goal-seek analysis.
Thus, among the choices, the scenario that best illustrates goal-seek analysis is identifying the amount of sales needed to break even, since it directly involves solving for an input value to meet a predefined goal. The other metrics describe outputs or evaluation criteria rather than an explicit goal-seeking calculation.

TB MC Qu. 09-28 An example of goal-seek analysis... An example of goal-seek analysis is determining

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