Arm & Hammer Began as a Producer of Baking Soda

question 33

Multiple Choice

Arm & Hammer began as a producer of baking soda. Now the company manufactures detergents, deodorants, and fabric softeners under the Arm & Hammer brand name. Arm & Hammer uses a ________ strategy.

• A) brand extension
• B) product line contraction
• C) downward line stretch
• D) cannibalization
• E) cobranding

---

Definitions:

Separate Entities

A principle in accounting where a business is considered a separate entity from its owners or shareholders, ensuring that business transactions are kept distinct from the personal transactions of owners.

Preferred Stock

A security that is similar to bonds in some respects and to common stock in others. Preferred dividends are similar to interest payments on bonds in that they are fixed in amount and generally must be paid before common stock dividends can be paid. If the preferred dividend is not earned, the directors can omit it without throwing the company into bankruptcy.

After-Tax Figure

The amount of money left after all applicable taxes have been subtracted from the gross or total amount.

Taxable Income

The amount of income that is used to calculate how much tax an individual or a company owes to the government.