LaVar, Inc

question 92

Multiple Choice

LaVar, Inc. has obtained probability estimates from its production and sales departments regarding the costs and selling prices it can anticipate for a new product line. The company is uncertain as to which combination of costs and selling prices will occur. The best method for determining the expected outcome of the investment, based on an assumed probability distribution associated both sales and costs, is:

• A) Monte Carlo simulation (MCS).
• B) The analytic hierarchy process (AHP).
• C) Correlation analysis.
• D) Multiple regression analysis.
• E) Linear programming.

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Definitions:

Revenue Centre

A segment, division, or unit of a business responsible for generating revenue, focusing on sales activities rather than profit or cost efficiencies.

Performance Measure

An assessment tool used to evaluate the effectiveness and efficiency of an individual's or organization's actions.

Standard Cost Variances

The differences between the estimated costs of production and the actual costs incurred.

Business Unit Reports

Financial or analytical documents that provide information on the performance of distinct divisions within a company.