What Is a Weakness of Manual What-If Analysis

question 43

Multiple Choice

What is a weakness of manual what-if analysis?

• A) biased sample values of performance measures
• B) hard to do many what-if scenarios
• C) does not provide distribution information
• D) all of these are weaknesses

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Definitions:

Overhead Cost Per Unit

The indirect manufacturing costs allocated to each unit of product produced.

Departmental Overhead Rate

A rate used to allocate overhead costs to specific departments, calculated based on the relationship between indirect costs and activity level.

Own Allocation Base

Refers to the specific denominator that a company chooses to allocate indirect costs to different cost objects, based on their usage or benefit from those costs.

Plantwide Overhead Rate

A single overhead absorption rate used throughout a manufacturing facility to allocate overhead costs to products.