Why Are Line Extensions More Common Than New Products

question 176

Multiple Choice

Why are line extensions more common than new products?

• A) They are higher risk and more expensive.
• B) They are guaranteed to succeed in the marketplace.
• C) They are less expensive and lower-risk.
• D) They require no market research.
• E) Modifications to existing products are very easy.

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Definitions:

Time-Driven Activity-Based Costing

A costing method that assigns costs based on the time resources are consumed by activities, improving accuracy in cost allocation.

Order Fulfillment Department

The department within a firm that handles the execution of customer orders and guarantees the provision of products or services.

Customer Cost Analysis

A method of evaluating the costs associated with acquiring and servicing a customer, compared to the revenue generated from the customer, to determine profitability.

Time-Driven Activity-Based Costing

A costing method that assigns costs to products and services based on the time resources are used to produce them, taking into account both variable and fixed costs.