When a Marketing Cost Analysis by Products Shows a Net

question 44

Multiple Choice

When a marketing cost analysis by products shows a net loss for one product,which of the following alternatives is management likely to adopt as a last resort?

• A)Raise the price,especially if the product has an inelastic demand.
• B)Drop the product from the line.
• C)Redesign or repackage the product.
• D)Simplify the assortment by eliminating some sizes or colors of this product.
• E)Reduce the price,especially if the product has an elastic demand.

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Definitions:

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, indicating the dollar amount investors will pay for $1 of earnings.

Market Price

The existing cost for buying or selling an asset or service.

Common Stock

Common stock represents shares of ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Acid-Test Ratio

A financial metric used to evaluate a company's short-term liquidity position by comparing its most liquid assets (excluding inventory) to its current liabilities.