Which of the Following Is True of IT Spending in an Organization

question 59

Multiple Choice

Which of the following is true of IT spending in an organization?

• A)Increased IT spending is usually associated with investor dissatisfaction and reduces companies' market value.
• B)The funds used to run a business are mainly for the kinds of IT resources that now fall into the commodity category
• C)Since IT is only an operational requirement and not a strategy enabler, companies should seek to reduce IT spending.
• D)Organizations should spend money on things that create a comparative advantage rather than on IT.

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Definitions:

Break-even Point

The point at which total costs equal total revenue, meaning the business makes neither a profit nor a loss.

Variable Cost

Costs that change in proportion to the level of production or business activity, such as materials, labor, and utility costs.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salary, or insurance, providing stability to a company's expense structure.

Margin of Safety

The difference between actual or projected sales and the break-even point, often expressed as a percentage.