The Most Often-Cited Benefits of Diversification Are

question 3

Multiple Choice

The most often-cited benefits of diversification are

• A)growth, risk reduction and value creation.
• B)risk reduction and economies of scope.
• C)value creation and cost reduction.
• D)cash balancing and risk reduction.

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Definitions:

Make or Buy

A decision-making process regarding whether to produce goods in-house or purchase them from an external supplier.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain constant regardless of the level of production, such as factory rent and salaries of supervisory staff.

Direct Labor Cost

A rephrased definition: The cost incurred from the labor of workers who actively contribute to the manufacturing or creation of a product.

Split-off Point

The moment during a production process where multiple products become separately identifiable.