In Order to Bring the Walker Hotel and Convention Center

question 58

Multiple Choice

In order to bring the Walker Hotel and Convention Center up to industry standards,each guest room was redecorated with new wallpaper,drapes,carpeting,mattresses and sofas.Mallanie Simms,sales manager for the Center,has recommended that guest rooms be upgraded with the addition of wide desks,voice mail,fax machines and 24-hour room service.From the viewpoint of most business travelers,these changes would result in the creation of a(n) :

• A)potential product
• B)generic product
• C)expected product
• D)sales product
• E)value-added product

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Definitions:

Minimum Required Rate of Return

The minimum return on an investment that is deemed acceptable, based on the risk tolerance of an investor or a company.

Variable Cost per Unit

The cost associated with producing one unit of a product, which varies with the level of production or sales volume.

Annual Fixed Costs

The total fixed costs a company incurs over a year, which do not vary with the level of production or sales.

Return on Investment

A measure of the profitability and efficiency of an investment, calculated by dividing net profits by the cost of the investment.