Management May Choose a Single Product Mix from Among Multiple

question 45

Multiple Choice

Management may choose a single product mix from among multiple optimal solutions because of:

• A)a desire to highlight a new product
• B)needs of an important customer
• C)strategies adopted by competitors
• D)All of the above
• E)None of the above

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Definitions:

Abandonment Option

A financial decision allowing companies to cease a project or investment to avoid further losses.

NPV

Net Present Value; a calculation used to assess the profitability of an investment, considering the present value of its cash flows.

Variances

Differences between planned financial outcomes and actual results, used in budgeting and financial management to analyze performance.

Abandonment Option

A form of real option in capital budgeting, giving a company the ability to abandon or terminate a project during its life if it becomes unprofitable.