If a Menu Item Is Estimated to Bring in $300,000

question 9

Multiple Choice

If a menu item is estimated to bring in $300,000 in future earnings without doing any market research, but it is believed the earnings could be increased to $330,000 by spending $40,000 on research, then the marketing director should:

• A) Veto the research
• B) Somewhat support the research
• C) Highly encourage the research
• D) Eliminate the menu item

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

T-Account

A visual representation of a ledger account that helps in understanding the effects of transactions on each account.

Raw Materials

The basic, unprocessed materials required in the manufacture of goods, often transformed through the production process.

Job-Order Costing

A costing method used to allocate costs to specific jobs or orders, tracking the expenses associated with each job individually.