A New Technology Is Most Likely to Be Successful in Displacing

question 25

Multiple Choice

A new technology is most likely to be successful in displacing an existing technology when:

• A) its installed base is significantly less than that of the existing technology.
• B) the new technology competes only on the value of its stand-alone utility.
• C) it eclipses the combined value of the existing technology's stand-alone utility, its installed base, and its complementary goods.
• D) the new technology's perceived and anticipated components of value are lower than its actual components of value.

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Definitions:

Direct Labor-Hours

The total number of labor hours spent by workers directly involved in the production process.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products or job orders based on a selected activity base.

Activity-Based Costing

A pricing strategy that attributes overhead and indirect expenses to associated goods and services by determining cost drivers.

Traditional Costing Method

An accounting approach that assigns manufacturing overhead costs to products based on volume-related measures such as direct labor hours or machine hours.