Elena Is Trying to Decide Whether She Should Expand Her

question 68

Multiple Choice

Elena is trying to decide whether she should expand her ice cream shop to a bigger space. She decides to be very methodical about it and follow the phases of the decision-making process she learned in college. Which of the following statements is true?

• A) During the intelligence phrase, Elena will build a model using assumptions about the business.
• B) During the design phrase, Elena will define the opportunity.
• C) During the choice phase, Elena will lay out her options.
• D) During the implementation phase, Elena will implement two of her solutions.
• E) Elena will use test data to validate her model.

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Definitions:

Costing System

A method or procedure adopted by a business to estimate the cost of its products for inventory valuation, cost control, and decision making.

Overapplied Overhead

Occurs when the overhead allocated to products or services is more than the actual overhead costs incurred.

Profit Margin

The percentage of revenue that exceeds the cost of goods sold, indicating the profitability of a product or service.

ABC Limitations

Challenges and constraints of Activity-Based Costing, such as its complexity and the potential for inaccurate cost allocation.