Independent Bookstore Signature Books Has Been Struggling to Survive as Sales

question 35

Multiple Choice

Independent bookstore Signature Books has been struggling to survive as sales declined sharply in the past year.Its main competitors are the large chain stores that have a much wider range of books and can afford to sell books at a discount,but online retailers are also eating into Signature's market.Signature Books focuses on a specialization strategy,focusing on foreign-language books and learning materials.Which of the following,if true,will support Signature's decision?

• A)Chain stores invest heavily in developing a customer-friendly style and atmosphere.
• B)Chain stores are the cost leaders in the category,as bulk buying and publisher discounts keep prices down.
• C)Online retailers have negligible operational costs as well as the price advantages of large chain stores.
• D)Chain stores stock mainly books of general interest,such as books by popular authors and self-help books.

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Definitions:

Net Operating Income

A measure of a company's profitability from its core business operations, excluding deductions of interest and taxes.

Variable Costing

A costing method that includes only variable manufacturing costs in product costs, treating fixed manufacturing overhead as a period expense.

Unit Product Cost

The comprehensive expenditure involved in creating a single product unit, encompassing direct materials, direct labor, and assigned overhead costs.

Absorption Costing

A method in accounting that integrates every manufacturing expense – direct materials, labor, and all overheads (variable and fixed) – into the product’s price.