Eric Is the Project Manager of the MTC Project for His

question 126

Multiple Choice

Eric is the project manager of the MTC project for his company. In this project a vendor has offered Eric a sizeable discount on all hardware if his order total for the project is more than $125,000. Right now, Eric is likely to spend $118,000 with vendor. If Eric spends $7,000 his cost savings for the project will be $12,500, but he cannot purchase hardware if he cannot implement the hardware immediately due to organizational policies. Eric consults with Amy and Allen, other project managers in the organization, and asks if she needs any hardware for their projects. Both Amy and Allen need hardware and they agree to purchase the hardware through Eric's relationship with the vendor. What positive risk response has happened in this instance?

• A) Transference
• B) Exploiting
• C) Sharing
• D) Enhancing

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials, labor, and overhead.

Standard Cost Variances

Refers to the differences between the standard costs planned for goods or services and the actual costs incurred.

FOH Volume Variance

A measure of the difference between the budgeted and actual overhead costs, attributable to changes in the volume of production.

FOH Budget Variance

The difference between the actual factory overhead costs incurred and the overhead costs budgeted for a specific period.