A Company Has Two Different Products That Sell to Separate

question 144

True/False

A company has two different products that sell to separate markets.Financial data are as follows:
$$\begin{array} { | l | r | r | r | } \hline & \text { Product A } & \text { Product B } &{ \text { Total } } \\\hline \text { Revenue } & \$ 15,000 & \$ 9,000 & \$ 24,000 \\\hline \text { Variable costs } & ( 7,000 ) & ( 9,200 ) & ( 16,200 ) \\\hline \text { Fixed costs (allocated) } & ( 4,000 ) & ( 1,000 ) & ( 5,000 ) \\\hline \text { Operating income (loss) } & \$ 4,000 & \$ ( 1,200 ) & \$ 2,800 \\\hline\end{array}$$ Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other.Because the contribution margin of Product B is negative,it should be dropped.

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Definitions:

Market-Product Grid

A matrix used to analyze and display the relationship between different markets (or customer groups) and the products offered, assisting in strategic decision-making.

Marketing Actions

Activities taken by organizations to promote the buying or selling of a product or service.

Market Segments

The division of a market into distinct groups of buyers with different needs, characteristics, or behaviors, who might require separate products or marketing approaches.

Market-Product Grid

A matrix used to represent the relationships between different markets (customer groups) and products, often to identify market segmentation or product differentiation opportunities.