Kathryn Wants to Open Up a Clothing Store

question 76

Multiple Choice

Kathryn wants to open up a clothing store. The target market she selects will largely determine the type of product she sells. She has performed research and come up with three market segments that she thinks could be profitable: formal wear for special events, stylish but high-end clothes for consumers who use clothing as a status symbol, and casual clothing for those whose main concern is comfort. Kathryn has used sales estimates, competitive assessments, and cost estimates to determine the potential profitability of each segment. What is Kathryn's next step in the process?

• A)Determine which segmentation variables to use
• B)Develop market segment profiles
• C)Develop sales forecasts
• D)Select specific target markets
• E)Evaluate relevant market segments

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Definitions:

Fixed Manufacturing Overhead

Costs that remain constant regardless of the level of production, related specifically to the manufacturing process, such as rent, utilities, and salaries of permanent staff.

Machine-Hours

A measure of machine usage, representing the total hours a machine operates during a specific period.

Volume Variance

The difference between the expected (budgeted) volume of production or sales and the actual volume, affecting costs and revenues.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated before the period begins based on estimated costs and activity levels.