A Company Is Trying to Decide Whether to Keep or Drop

question 52

Multiple Choice

A company is trying to decide whether to keep or drop the organic foods department in its grocery store.If organic foods are dropped, the manager will be laid off.What is the manager's salary in relation to the decision to keep or drop the department?

• A)An opportunity cost and therefore relevant
• B)Avoidable and therefore incremental
• C)Sunk and therefore not relevant
• D)The same for all alternatives and therefore not relevant

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Definitions:

Social Capital

The networks of relationships among people who live and work in a particular society, enabling that society to function effectively.

Intellectual Capital

The intangible value of a business's knowledge, experience, and ideas.

Operating Capital

Funds required to run the day-to-day operations of a business, crucial for maintaining liquidity and operational efficiency.

Venture Capital

Financing provided by investors to startup companies and small businesses with long-term growth potential.