When a New Firm Does Not Have Any "In-House" Manufacturing

question 56

Multiple Choice

When a new firm does not have any "in-house" manufacturing for its brand,it is likely to

• A)have a production cost advantage.
• B)enjoy less competitive pricing.
• C)attract potential new markets.
• D)have the advantage of flexibility.
• E)fail in marketing research.

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as the cost of raw materials used in production.

Unit Product Cost

The cost associated with producing a single unit of a product, including all direct and indirect costs.

Contribution Margin

Contribution Margin represents the portion of sales revenue that is not consumed by variable costs and contributes to covering fixed costs.

Machine Minutes

A measurement of time expressing the operation of a machine in minutes.