Which of the Following Conclusions, If Made by the External

question 103

Multiple Choice

Which of the following conclusions, if made by the external agency, will indicate the company's weakness?

• A)The company incurs high transportation costs as its manufacturing facility is at a remote place.
• B)Many new players have entered the wholesale food industry in recent times.
• C)An economic downturn has increased people's liking for organic products.
• D)A food poisoning disaster that occurred recently has lowered people's preference for packaged foods.
• E)The company must buy new machinery to remain competitive in the market.

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Definitions:

Variable Cost

Costs that vary in direct proportion to changes in a business’s level of activity or volume of output produced, such as materials and labor.

Differential Cost

The difference in cost between two alternative decisions or scenarios.

Incremental Cost

The additional cost associated with producing one more unit of a product.

Step-Wise Cost

Costs that remain constant for a certain level of activity but jump to a higher amount once a threshold is crossed.