IIA-CIA-Part2 practice questions, page 24 of 39, with answer review and explanations.
Question 116
After completing a net present value (NPV) calculation on a proposed project, an analyst explores the change in NPV with changes in the interest rate. This additional analysis is referred to as:
Decision analysis.
simulation.
Sensitivity analysis.
Variance analysis.
Question 117
A company used simple regression analysis to analyze maintenance costs against machine hours (MH) for a 26-week period when the plant was in full operation. The regression yielded the following estimated cost function: Maintenance Cost = $60 + $0.25/MH The regression analysis also generated a coefficient of determination (R2), or goodness of fit, of 0.85. Which of the following statements regarding this regression analysis is appropriate?
This regression can be used to determine the maintenance cost for any period at any activity level by substituting the machine hours in the equation.
The $60 component represents the best estimate of fixed maintenance costs for the company in a shutdown situation.
The $0.25 component is the slope coefficient of the cost estimate and represents the average variable maintenance cost per machine hour.
The coefficient of determination of R2 = 0.85 indicates that the goodness of fit is poor because the value is close to the maximum value of one.
Question 118
Which of the following techniques could be used to evaluate the effectiveness of changes to the operation of a computer help line?
Benchmarking.
Baseline measurements.
Walk-throughs.
Quality circles.
Question 119
One method for dealing with the uncertainty of demand forecasts used in linear programming is to extend the model solution to include.
Sensitivity analysis.
Goal seeking.
Branch-and-bound solutions.
Nonlinear programming.
Question 120
Which of the following factors is least essential to a successful control self-assessment workshop?