Sensitivity Analysis Can Best Be Used in the Budgeting Process

question 131

Multiple Choice

Sensitivity analysis can best be used in the budgeting process to:

• A) explore the uncertainty surrounding their estimates.
• B) remove the subjective nature from the budgeting process.
• C) answer "what-if" questions regarding key projections.
• D) consider alternatives and options in the budgeting process.

Grasp the strategies for increasing capacity and managing bottlenecks.

Distinguish between different types of capacities such as design, effective, and expected output.

Recognize the importance of the theory of constraints in operational effectiveness.

Interpret the relationship between capacity utilization and process efficiency.

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Definitions:

Rate of Interest

The percentage charged on a loan or paid on savings over a period of time, indicating the cost of borrowing or the gain on savings.

Invested

Refers to funds that have been allocated into assets or projects with the expectation of earning a return.

Worth

The total value of all financial and non-financial assets owned by an individual or business minus any liabilities.

One-time Investment

An investment made in a lump sum, as opposed to investing in smaller, incremental amounts over time.