Which of the Following Statements Is CORRECT

question 57

Multiple Choice

Which of the following statements is CORRECT?

• A) in comparing two projects using sensitivity analysis, the one with the steeper lines would be considered less risky, because a small error in estimating a variable such as unit sales would produce only a small error in the project's npv.
• B) the primary advantage of simulation analysis over scenario analysis is that scenario analysis requires a relatively powerful computer, coupled with an efficient financial planning software package, whereas simulation analysis can be done efficiently using a pc with a spreadsheet program or even with just a calculator.
• C) sensitivity analysis is a type of risk analysis that considers both the sensitivity of npv to changes in key input variables and the probability of occurrence of these variables' values.
• D) as computer technology advances, simulation analysis becomes increasingly obsolete and thus less likely to be used as compared to sensitivity analysis.
• E) sensitivity analysis as it is generally employed is incomplete in that it fails to consider the probability of occurrence of the key input variables.

Understand the concept and application of responsibility accounting.

Learn the process for calculating desired ending inventory levels.

Understand the production budget process and its components.

Recognize the implications of budgeting models and their application in management.

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Definitions:

Individual Differences

Variations among individuals in their behavior, cognition, personality, and other attributes, which distinguish one person from another.

Consumer Behavior

The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

Marketing

The method of marketing, selling, and distributing goods or services, encompassing market analysis and promotion activities.

Selective Distortion

The process by which individuals perceive and interpret information in a way that is biased by their previously held beliefs.