As the Degree of Sensitivity of a Project to a Single

question 9

Multiple Choice

As the degree of sensitivity of a project to a single variable rises,the:

• A)less important the variable to the final outcome of the project.
• B)less volatile the project's net present value to that variable.
• C)greater the importance of accurately predicting the value of that variable.
• D)greater the sensitivity of the project to the other variable inputs.
• E)less volatile the project's outcome.

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Definitions:

Variable Selling

Expenses related to sales that vary with the level of sales activity, such as commissions or shipping costs.

Administrative Costs

All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing or selling.

Special Order

A unique customer request for goods or services that differ from the company's standard offerings, often requiring special pricing and production considerations.

Traceable Fixed Costs

Costs that can be directly associated with a specific product, service, or department without any ambiguity.