A Conversion Strategy Whereby an Organization Continues to Operate the Old

question 7

Multiple Choice

A conversion strategy whereby an organization continues to operate the old system together with the new one for one or more cycles,until the new system is working properly and the old system can be discontinued,is called a:

• A) pilot strategy.
• B) phased strategy.
• C) cutover strategy.
• D) parallel strategy.

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Definitions:

Financial Break-even Point

It is the level of revenue necessary to cover a company’s fixed and variable costs, without generating profit or loss.

Degree of Operating Leverage

A financial metric that measures the sensitivity of a company's operating income to changes in its sales, highlighting the effect of fixed costs on profits.

Conventional Cash Flows

Conventional cash flows involve an initial outlay followed by a series of positive cash inflows, typically seen in standard investment scenarios.

Marginal Cost

The additional cost incurred in producing one more unit of a product or service, critical for making production decisions.