A Grocery Store Wants to Encourage Its Customers to Bring

question 91

Multiple Choice

A grocery store wants to encourage its customers to bring their own shopping bags,thus saving the store money on purchasing plastic or paper bags and saving the environment in the process.For an Earth Day promotion,the store gives away free canvas bags and engages in a substantial advertising campaign to highlight the initiative.Then,the store rewards customers who bring their own bags with a 5% discount on all future shopping trips.Which of the following is not a way this initiative might be reflected in the grocery store's contribution margin income statement?

• A)It wouldn't be.Contribution margin income statements do not currently support sustainability accounting.
• B)The store's fixed costs would increase to account for the promotional materials and the fixed costs of providing free bags to customers.
• C)The store's sales revenue would decrease to reflect the discounts given to customers who bring their own bags.
• D)The store's variable costs would decrease to reflect the reduced cost of providing paper or plastic bags to all customers.

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Definitions:

Technological Conditions

The state of available technology and its influence on a company's operations, capabilities, and industry environment.

Competition

A situation in which two or more parties strive for a goal that cannot be shared, such as a market that cannot support everyone.

General Environment

The broad external conditions that affect organizations and industries, including economic, legal, technological, and cultural factors.

Managerial Decision Making

The process by which managers select among available options to solve problems and take advantage of opportunities to achieve organizational goals.