1) The binomial distribution can be used when there are a small number of states of nature and/or alternatives.
2) Cost volume analysis deals only with costs while break-even analysis deals with both costs and revenues.
3) ? describes the dispersion or spread of the normal distribution.
4) When computing Z for a break-even analysis: as ? increases, Z decreases.
5) In many business break-even analyses, the normal distribution can be used to estimate demand.
6) If a variable other than demand is random (price, fixed or variable cost, etc.) the problem of break-even analysis becomes much more complex.
7) Using EOL requires one to identify the loss per unit when sales are below the break-even point.
8) The unit normal loss integral can be used to compute EOL.
9) EVPI and minimum EOL are equivalent.
10) In determining the EOL with the normal distribution, as D increases, the unit normal loss integral, N(D), also increases.
11) In many business decisions, there are numerous states of nature and/or alternatives. These problems are best handled by
A) constructing a large decision table and using Excel.
B) constructing a large decision tree.
C) using the normal distribution.
D) using the integral loss distribution.
E) None of the above
12) The price/unit minus the variable cost/unit is
A) loss/unit when sales are below the break-even point.
B) the break-even point.
C) the Z value.
D) EOL.
E) None of the above
13) If fixed costs were to double unexpectedly, the break-even point would be
A) unaffected.
B) doubled.
C) halved.
D) increased by a factor of four.
E) None of the above
14) If the price/unit were doubled at the same time that the variable cost/unit doubled, the break-even point would be
A) unaffected.
B) doubled.
C) halved.
D) increased by a factor of four.
E) None of the above
15) If variable cost/unit falls, the fixed cost rises, and the selling price/unit remains constant, the break-even point
A) stays the same.
B) decreases.
C) increases.
D) None of the above
E) Unable to say without more information
