Which of the Following Results in a Probability Distribution for Possible

question 18

Multiple Choice

Which of the following results in a probability distribution for possible project outcomes rather than a dollar estimate?

• A) Sensitivity analysis
• B) Simulation
• C) Value driver analysis
• D) Scenario analysis

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Definitions:

Efficiency Variances

These variances measure the difference between the actual input used to produce a good or service and the standard input expected to be used, showing how efficiently resources are utilized.

Rate Variances

Differences between actual rates paid for inputs and the standard expected rates, often analyzed in cost accounting for labor, materials, and overhead costs.

Variable Overhead

Costs that vary with production volume, such as utilities for a factory, which do not remain constant as production levels change.

Materials Quantity Variance

Materials Quantity Variance is the difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit, indicating efficiency in material usage.