Which of the Following Appears to Be a More Likely

question 125

Multiple Choice

Which of the following appears to be a more likely result from using sensitivity analysis?

• A)Agreement on the appropriate discount rate
• B)Determine whether to finance with debt or equity
• C)Isolation of pivotal factor in project profitability
• D)Select the best capital budgeting project

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Definitions:

Favorable

A term used in accounting and finance to describe outcomes or variances that are better than anticipated, indicating a positive performance against the budget or forecast.

Unfavorable

A term used to describe a variance or outcome that results in a worse financial position than expected or budgeted.

Labor Rate Variance

The difference between the actual labor costs incurred and the expected (or standard) labor costs, often due to paying a higher or lower wage rate than planned.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead allocated based on activity levels.