When Executives at GreatBuy, an Electronics Consumer Goods Store, Noted

question 57

Multiple Choice

When executives at GreatBuy, an electronics consumer goods store, noted flat sales and declining profits, they decided to remove products that were not selling well.In this example, GreatBuy:

• A)changed the number of stock keeping units.
• B)increased product line depth.
• C)decreased product line depth.
• D)changed the product category.
• E)changed the brand orientation.

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Definitions:

Margin of Safety

The difference between actual sales and the break-even point, used to assess the risk of loss from declining sales.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion to the amount of goods produced or the volume of sales, including labor and materials.

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, highlighting the scalability of a company’s business model.