The Preferred Strategy for Question Marks Is to Grow or Retrench

question 82

Multiple Choice

The preferred strategy for Question Marks is to grow or retrench because:

• A) they produce large profits and a strong cash flow, but have little upside potential.
• B) they may not generate much profit at the moment, but they have an upside potential.
• C) the markets offer great growth opportunity, given that they are new to the market.
• D) they are not only high performers in the present, but they offer similar potential for the future.
• E) they produce little if any profit, and must be supported so that they perform better.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on the predetermined rate.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product and included in the direct costs of production.

Variable Overhead

Costs that vary with the level of production or business activity, such as utilities or indirect materials.

Direct Material

Raw materials and components that are directly incorporated into a finished product and can be easily traced to the product.