Sensitivity Analysis May Be Used to

question 43

Multiple Choice

Sensitivity analysis may be used to

• A)experiment with possible future changes in the firm that may affect profits.
• B)determine whether a corner point of the feasible region actually yields optimal profit.
• C)replace the simplex method.
• D)reduce the number of variables in a complex LP problem.

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Definitions:

Product Costing System

A framework used to determine the expense associated with producing a product, taking into account all direct and indirect costs.

Indications

Suggestions or signals that point towards a specific condition, trend, or action.

Behavioral Implications

The impact that business strategies and practices have on the behavior and motivation of individuals within an organization.

ABC

Activity-Based Costing, a method of allocating overhead and indirect costs to specific products or projects based on the activities that consume resources.