Elle Appliances Has Recently Released Its "Elite" Cooking Range

question 18

Multiple Choice

Elle Appliances has recently released its "Elite" cooking range. The cooking appliances were advertised extensively with offers for early-bird buyers and assured refunds if the goods were found defective. This resulted in a lot of hype surrounding the goods and high levels of projected demand in the market. However, after its release in the market, the products failed to substantially add to the company's profits. When the venture failed to recover even the minimum projected returns, the marketing manager blamed the production department for the delays in production, while the production manager claimed that he was doing his best to dispatch stock on the predetermined days. Which of the following best explains the failure of this venture by Elle?

• A) The company followed a low inventory system.
• B) Elle was a reputed company which enjoyed the loyalty of customers.
• C) Elle had recently acquired one its major rival firms.
• D) The company minimized its operating costs by using efficient production techniques.
• E) The company priced the "Elite" cooking range at relatively low rates.

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Definitions:

Net Realizable Value

The estimated selling price of goods, minus the cost of their sale or disposal, used in inventory valuation and accounts receivable.

FIFO

An inventory valuation method known as "First-In, First-Out," where goods purchased or produced first are sold or used first.

Perpetual Inventory System

An inventory management method where inventory levels are updated in real-time following each sale or purchase transaction.

Net Income Manipulation

The practice of using accounting tricks to make a company's financial performance appear better than it actually is.