Which Diversification Strategy Is Based on the Idea That the Company

question 57

Multiple Choice

Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another business activity?

• A) A technology acquisition strategy
• B) Related diversification
• C) A restructuring strategy
• D) Total diversification
• E) A taper diversification strategy

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Definitions:

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and inventory valuation.

Fixed Factory Overhead

Fixed factory overhead refers to those manufacturing costs that do not change with the level of production, including rent, depreciation, and salaries of permanent staff.

Absorption Costing

A method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.