Why Do Firms Conduct Product Testing

question 83

Multiple Choice

Why do firms conduct product testing?

• A) To determine potential profitability of the product
• B) To allow for gradual commercialization over time
• C) To ensure the prototype meets performance requirements
• D) To determine how well the product fits in with the goals of the organization
• E) To determine the potential reaction of consumers

---

Definitions:

Responsibility Accounting

A system of accountability in which managers are held responsible for those items of revenue and cost—and only those items—over which they can exert significant control. The managers are held responsible for differences between budgeted and actual results.

Manager

A manager is an individual responsible for directing and administering an organization's or department's activities and strategies.

Operations

The day-to-day activities involved in the running of a business or production of goods and services.

Investment Center

A business segment or unit within an organization for which the manager has control and is responsible for its revenue, expenses, and the assets invested in the center.