Frito-Lay,a Division of PepsiCo,manufactures,markets and Distributes a Variety of Snack

question 86

Multiple Choice

Frito-Lay,a division of PepsiCo,manufactures,markets and distributes a variety of snack foods,including Fritos corn chips,Lay's potato chips,Cheetos cheese snacks,Doritos tortilla chips,and Quaker Chewy granola bars,just to name the most familiar products.Which of the following costs for Frito-Lay are avoidable costs:
1) Commission payments to Frito-Lay sales representatives.
2) All the costs associated with winning approval by the FDA to advertise Frito-Lay's new cheese popcorn snack as a probiotic nutritional supplement.
3) Labor cost for installing two new plasma technology baking ovens at the St.Louis production plant.
4) Legal fees incurred in winning an antitrust lawsuit filed by rival company R.W.Garcia,who sued Frito-Lay for illegal price fixing of flax seed chips.

• A)1
• B)1 and 3
• C)3 and 4
• D)2,3 and 4
• E)1,2,and 4

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Definitions:

Profit Declines

A decrease in the difference between revenues earned and expenses incurred over a given period.

Analog TVs

Television systems that use analog signals to transmit video and audio as opposed to digital formats; now largely obsolete with the advent of digital broadcasting.

Product Life Cycle

The progression of a product through stages from introduction to growth, maturity, and decline.

Maturity Stage

This term refers to a phase in the product lifecycle where sales growth slows down, and the product has been accepted in the market, typically leading to increased competition.