Monte Carlo Simulation Is an Inappropriate Tool to Analyze Cash

question 24

True/False

Monte Carlo simulation is an inappropriate tool to analyze cash budgets because of the inherent uncertainty of the sales forecasts on which most cash budgets are based.

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Definitions:

Raw Materials

The unprocessed natural materials or substances used in the initial stages of production or manufacturing.

Cost System

A method used to allocate costs to products, services, projects, or departments to facilitate financial analysis, budgeting, and managerial decision-making.

Gallons

A unit of volume measurement used primarily for liquids, commonly used in the United States.

Work in Process

Inventory representing partially finished goods that are in the process of being converted from raw materials to complete products.