Use This Information for Questions That Refer to the Wire

question 241

Multiple Choice

Use this information for questions that refer to the Wire Products Inc.(WPI) case. Rob Rose sat back to review the portfolio of products his company,Wire Products Inc.(WPI) ,has in its product line.The company specializes in making various products for consumer and industrial uses from hard laminated wire that is coated with special paints.
1) WPI's Wire Closet products have been on the market for 10 years.Consumers install the wire shelves and closet rods themselves.The market leader,Closetmaid,has been selling similar products for more than 20 years,but so far the sales volume and profits for the market have continued to grow.Recently,several new competitors have come into the market.
2) Three months ago,WPI entered the lawn and garden market with folding fences made with laminated wire and branded as Wire Fold-Fence.Previously,WPI had never made fences or been a player in the lawn and garden market-although other companies have been making products in this market for years.However,Rob Rose has discovered that recent sales of wire garden fencing have leveled off and profits are declining overall.Still,WPI thinks it has some cost advantages and can grow its own sales and profits in this market.
3) WPI has just developed Oil Wire,a new concept for the environmental cleanup market.Oil Wire is coated with a special material that cleans up oil spills.There has never been a product like this and WPI wants to quickly get the word out about its benefits.The product is now being rolled out in selective markets.
4) Another business product is Wire Locker,used for secure storage by gymnasiums or companies.This style of locker has now gone out of fashion,and most customers are finding better materials to use for lockers.Aggressive selling has helped Wire Locker's sales stay flat,but the total market for wire-style lockers is only half what it was 10 years ago.
5) WPI's Wire Window product is used as a security product to protect glass windows.It sells to homeowners and retailers looking for additional safety.WPI's sales of this product have dropped in recent years because competitors have introduced maintenance-free products.However,the overall market for this type of product continues to show good growth.
6) WPI is running concept tests of a new wire car-top carrier called Wire Car Top.There are other car-top carrier products on the market,but WPI plans to include options in its carrier that will make it easier to load bikes,skis,and suitcases.Wire Car Top is also very easy to put on and take off of the car because of its light weight and ease-of-use features.The concept tests are helping WPI analysts develop rough estimates of costs,sales,and profits.
7) Another new-product idea,tentatively called Wire Tent,is being considered.It would use laminated wires to create a portable tent frame.This product is currently being evaluated to determine its fit with the company's objectives and external market trends.
Rob is thinking about the product life cycle,where each product fits,and what he should be doing as part of his marketing plan for each of these products.
In which stage of the product life cycle is Wire Fold-Fence?

• A)sales decline
• B)market introduction
• C)market maturity
• D)market growth
• E)market development

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Definitions:

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production process, often used to allocate manufacturing overhead.

Activity-Based Costing

A costing method that allocates overhead costs to products based on the activities required to produce them.

Manufacturing Overhead

includes all the indirect costs associated with the production process, such as utilities, maintenance, and factory equipment depreciation, which are not directly traceable to a specific product.

Traditional Costing System

A costing methodology that assigns manufacturing costs to products based on volume metrics such as direct labor hours or machine hours.