When Performing a Sensitivity Analysis, If the Selling Price Per

question 90

Multiple Choice

When performing a sensitivity analysis, if the selling price per unit is increased, then the ________.

• A) per unit fixed administrative costs will increase
• B) per unit direct materials purchase price will increase
• C) total volume of sales will increase
• D) total costs for sales commissions and other nonmanufacturing variable costs will increase

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Definitions:

Centralized Decision Making

A process where decisions are made by a few people or a single authority, rather than being dispersed among many.

Destroy Incentives

To eliminate or significantly reduce the motivations or reasons for individuals or entities to take a particular action or endeavor.

Society's Resources

The total means available to a society, including natural resources, human capital, and manufactured goods, used for production and consumption.

Free-Market System

An economic system where prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.