For Example, When Honda Develops a New Engine, the Incidental

question 73

Multiple Choice

For example, when Honda develops a new engine, the incidental effects might include the following:
I. demand for replacement parts
II. profitable service facilities
III. offer modified or improved versions of the engine for other uses

• A) I only
• B) I and II only
• C) I,II, and III
• D) None of the given ones

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Definitions:

Variable Cost

Costs that vary directly with the level of production or with the volume of output.

Fixed Cost

Expenses that do not change with the level of production or sales volume, such as rent, salaries, and insurance premiums.

Contribution Margin Technique

A method used to evaluate how sales affect net income or profits, calculated as sales revenue minus variable costs.

Net Income (Loss)

The total profit or loss a company generates in a specific period after all expenses, taxes, and costs have been deducted from total revenue.