Scenario/sensitivity Analysis Is a Procedure That Can Be Used in the Capital

question 33

Multiple Choice

Scenario/sensitivity analysis is a procedure that can be used in the capital budgeting process to indicate how sensitive the ____ is to changes in a particular variable.

• A)probability
• B)return distribution
• C)net present value
• D)standard deviation

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Definitions:

Budgeted Costs

Budgeted costs are estimated expenses that a company plans to incur during a specific period for various activities or projects.

Peak-Period Requirements

The maximum capacity or resources needed to meet demand during the busiest or peak times.

Fixed Costs

Fixed costs are expenses that remain unchanged regardless of the level of production or sales, foundational to a company's financial structure.

Variable Costs

Outlays that directly correspond to production levels, encompassing costs for raw materials and direct labor.