Scenario 8.2 Use the Following to Answer the Questions

question 145

Multiple Choice

Scenario 8.2
Use the following to answer the questions.
Precision Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATV's.It also sells its products to independent repair centers,dealers,and other wholesalers in the northeast and southern states.Precision Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of Kentucky,Tennessee,and Alabama.Research also shows that most of the dealers who sell directly to individual consumers are in the midwestern states,while dealers who sell to small business landscaping companies tend to be located in the northeastern states.Company executives are considering expansion of its distribution to markets in the Midwest.
-Refer to Scenario 8.2.Last year,Precision Brake's sales to the manufacturers of lawn tractors declined,partially due to the fact that more consumers were hiring small landscaping businesses to cut their grass.This decline in sales for Precision Brake is an example of

• A)Product scarcity
• B)Joint demand
• C)Derived demand
• D)Reciprocity demand
• E)Inelastic demand

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Definitions:

Actual Hours

The real number of hours worked or spent on a specific task, project, or production process.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected, multiplied by the standard cost per unit.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the product’s cost.

Direct Labour

The wages of workers or employees who are directly involved in the production of goods or the delivery of services.