In General, the Costs Associated with Doing Business Abroad but Maintaining

question 73

Multiple Choice

In general, the costs associated with doing business abroad but maintaining product-related diversification are:

• A)​Greater than the costs of managing a conglomeration while mostly staying at home.
• B)​Less than the costs of managing a conglomeration while mostly staying at home.
• C) ​About the same as the costs of managing a conglomeration while mostly staying at home.
• D) ​Greater than the costs for all other combinations of geographic and product scope.

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Definitions:

Margin of Safety

Margin of Safety is the difference between actual or expected sales and the break-even point, expressed in terms of units, dollars, or percentage, indicating how much sales can fall before a business incurs a loss.

Contribution Margin Ratio

A financial metric that measures how much of a company's revenue is available to cover its variable costs and contribute to its fixed costs and profits.

Fixed Costs

Expenses that do not change with the level of goods or services produced by the business, such as rent, salaries, and insurance premiums.

Break-even Point

The point at which total income matches total outgoings, leading to neither a profit nor a loss.