The Idea That Once a Manager Makes a Large Investment,he

question 61

Multiple Choice

The idea that once a manager makes a large investment,he should not abandon the project is known as the:

• A)negative NPV fallacy.
• B)abandonment fallacy.
• C)sunk cost fallacy.
• D)dependence fallacy.

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Definitions:

CVP Income Statement

An income statement format that organizes costs based on whether they are fixed or variable and is used in Cost-Volume-Profit analysis to determine how revenues, costs, and profits are influenced by changes in volume.

Variable Expenses

Costs that change in proportion to the activity of a business such as sales volume or production levels.

CVP Income Statement

A financial report that shows the effects of varying levels of sales and product costs on a company's net income.

Gross Profit

The financial measure representing the difference between sales revenue and the cost of goods sold before deducting administrative and selling expenses.