Whenever a Company Introduces a New Product in a Portfolio

question 52

Multiple Choice

Whenever a company introduces a new product in a portfolio, there is a risk of ________, which occurs when sales of an existing product decline as the firm's current customers switch to the new product.

• A) counterfeiting
• B) disintermediation
• C) cannibalization
• D) brand inequity
• E) bundling

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Definitions:

Deferred Gross Profit-Year 2

The portion of profit from installment sales recognized in the second year, not immediately at the time of sale, due to revenue recognition principles.

Cost Of Installment Goods Sold

The cost assigned to goods that have been sold on installment, including both the cost of manufacturing and a portion of interest on the installment sales.

Installment Sales Revenue

Income recognized from sales made where payment is received in periodic installments, often used in financing transactions for high-ticket items.

Deferred Gross Profit-Year 1

This refers to the portion of gross profit on sales made in the first year that is not recognized immediately but is deferred to future periods under certain accounting methods.