Which of the Following Is NOT True About Simulation Models

question 5

Multiple Choice

Which of the following is NOT true about simulation models?

• A) Simulations can be used to analyze processes that cannot be evaluated well analytically.
• B) A simulation model is used to get estimates; an analytical model provides detailed analysis.
• C) Simulations can use actual probability rates for both demand and service rates.
• D) Analytical and simulation models are often used in combination.

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Definitions:

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable overhead) in product costs, excluding fixed overhead.

Net Operating Income

Profit generated from a company’s core business operations, excluding deductions of interest and taxes.

Absorption Costing

This accounting practice involves the comprehensive addition of manufacturing costs—direct materials, direct labor, and both variable and fixed overheads—to the price of a product.

Fixed Manufacturing Overhead

Fixed manufacturing overhead consists of indirect production expenses that remain constant regardless of the volume of products manufactured, like equipment depreciation.