Research Indicates That the Number One Reason for Terminating Research

question 29

Multiple Choice

Research indicates that the number one reason for terminating research and development projects is:

• A)that the project is found to be inconsistent with organizational goals.
• B)the project costs more to complete than originally planned.
• C)the low probability of achieving technical or commercial success.
• D)increased government restrictions.

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Definitions:

Variable Expenses

Expenses directly linked to the volume of output, adjusting in accordance with business activity levels.

Fixed Expenses

Recurring costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to a change in its sales volume, signifying the impact of fixed versus variable costs.

Variable Expenses

Costs that vary directly with the level of production or sales volume, such as raw materials, direct labor, and sales commissions.