Refer to the Scenario Below to Answer the Following Questions

question 15

Multiple Choice

Refer to the scenario below to answer the following questions.
Management Decisions : Declining Income (Scenario)
Net income has fallen for the second consecutive quarter, and Amanda is understandably worried. She knows there will be a lot of questions for her at the board of directors meeting Wednesday, and she will be expected to reveal her plan to avoid any third-quarter losses. Amanda begins to analyze the company's financial reports to try to determine the cause of the loss. After much consideration, it appears that expenses have risen dramatically over the last few months. Amanda wonders why. She decides a meeting of the department heads is in order first thing tomorrow morning. At the meeting, Amanda would like to generate several possible solutions to the increased expenses. She wonders how to effectively explore all the options. Next morning, the first option presented at the meeting is to downsize the research and development department, since it is not essential to current operations. Several managers believe the plan will help stem the losses and immediately move to approve it. However, Amanda suggests that they need to look further at the issue and explore other potential solutions. Several suggestions are made, many of which appear to be viable. Amanda wonders what to do next.
-Amanda's group has proposed a solution that does not have much data or evidence to support it. However, based on Amanda's 20 years of experience, the solution just feels right, and so she proposes it to the board of directors. Amanda has made her decision based on __________.

• A) heuristics
• B) intuition
• C) hindsight bias
• D) overconfidence bias
• E) availability bias

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Definitions:

Overapplied Overhead

A situation where the allocated or estimated manufacturing overhead costs exceed the actual overhead costs incurred.

Work in Process

Refers to the total cost of unfinished goods in the manufacturing process at any given time.

Estimated Overhead Costs

The anticipated costs for overhead activities in a business, including utilities, rent, and management salaries, not directly tied to product production.

Overapplied Overhead

A situation where the estimated overhead costs allocated to products or services exceed the actual overhead costs incurred.