A Reduction in the Sales of an Existing Product Caused

question 24

Multiple Choice

A reduction in the sales of an existing product caused by the introduction of a new product is an example of a(n) :

• A) sunk cost.
• B) opportunity cost.
• C) erosion.
• D) fixed cost.

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Definitions:

Profitability

Profitability is a measure of the efficiency and financial success of a business or project, indicated by the ability to generate income greater than its expenses and costs.

Times Interest Earned

Times interest earned is a financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Interest Expense

The cost of borrowing money.

Income Tax Expense

The cost associated with income taxes owed to federal, state, or local governments, recognized in the accounting period in which the income was earned.