New Projects or Products Can Have an Indirect Effect on the Firm

question 75

Multiple Choice

New projects or products can have an indirect effect on the firm as well as a direct effect.Which of the following appears to be an indirect effect of launching a new product?

• A) Additional working capital is required.
• B) Sales force will need to be increased.
• C) Sales of a similar product of your firm's will decline.
• D) Additional machinery must be purchased.

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Definitions:

Fixed Expenses

Costs that do not vary with the level of production or sales within a certain range.

Special Order

An order for goods or services that is outside the company's normal scope of work, which can often require a unique pricing strategy and cost analysis.

Variable Expenses

Costs that fluctuate with business activity levels, such as raw material costs or utilities following production volumes.

Net Income

The total profit of a company after all expenses, including taxes and operational costs, have been subtracted from total revenue.