Two Managerial Accounting Tools Useful in Considering the Uncertainty of Estimates

question 188

Multiple Choice

Two managerial accounting tools useful in considering the uncertainty of estimates are

• A)sensitivity analysis and expected value analysis
• B)sensitivity analysis and capital rationing
• C)net present value method and expected value analysis
• D)capital rationing and expected value analysis

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Definitions:

Year 1

Refers to the first year in a given time series, fiscal period, or timeframe under consideration.

Absorption Costing

An accounting approach that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Operating Income

The profit realized from a company's everyday business operations, calculated by subtracting operating expenses from gross profit.

Year 1

Typically refers to the first year of operation or the initial year in a set period under review or analysis.