Which of the Following Statements Regarding Diversification Analysis Is Most

question 315

Multiple Choice

Which of the following statements regarding diversification analysis is most accurate?

• A)Companies should only use diversification analysis if they are well-established;new companies that use this process run the risk of trying to do too much too soon.
• B)For any product,there is both a current and a new market;for any market,there is both a current and a new product.
• C)Most companies discover that there is at least one product that is targeted to the wrong market.
• D)Diversification analysis is only effective for consumer products.
• E)Diversification analysis is used to forecast and calculate industry sales for new products.

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Definitions:

Variable Costing

An accounting method that only considers variable costs (costs that change with production volume) in product costing and in the calculation of net income.

Absorption Costing

A method of product costing that includes all manufacturing costs, both variable and fixed, in the cost of a product.

Direct Labor Cost

The wages and related benefits paid to workers who are directly involved in the production of goods or services.

Reconciliation

The process of ensuring that two sets of records (usually the balances of two accounts) are in agreement.