Scenario C

question 6

Multiple Choice

Scenario C. Four entrepreneurs are discussing the potential for success or failure of their ventures. A few of them realize that they did not understand the risk involved in their undertaking. They describe their start-ups in the following manner:
1. Raymond: "I had very little money invested but I was the first on the market with my product."
2. Lotina: "My firm had a very substantial amount of money invested in my venture because I had a completely new and unique product that was expensive to create."
3. Sharida: "I had almost nothing invested in my business which produced a product with many similar competitors already on the market."
4. Kevin: "I have spent an incredible amount of money getting my business going in an industry with many well-established competitors."

-According to the Entrepreneurial Strategy Matrix,Kevin most likely runs

• A)a small business with high start-up costs.
• B)a completely novel services business.
• C)an intrapreneurial team for a product with high R&D costs.
• D)a small shop manufacturing simple and unique handmade products.
• E)A or B

Understand the concept of flexible budgeting and its importance in financial planning.

Calculate budget variances and interpret whether they are favorable or unfavorable.

Analyze financial performance using flexible budget reports.

Apply cost and revenue formulas to generate budget reports.

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Definitions:

Intercompany Sale

Transactions of goods, services, or assets between divisions, subsidiaries, or companies controlled by the same parent company.

Mark-Up

The percentage added to the cost price of goods to cover overhead and profit, determining the selling price.

Impairment Loss

A decrease in an asset's recoverable amount below its carrying amount, leading to a reduction in its value on the financial statements.

Effective Tax Rate

The percentage of their income that individuals or corporations pay in taxes, taking into account all deductions and credits.