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An Electronics Manufacturer Is Trying to Encourage Its Engineers to Design

question 25

Essay

An electronics manufacturer is trying to encourage its engineers to design simpler products so that overall costs are reduced.
Required:
Which of the value-chain function costs (R&D, design, production, marketing, distribution, customer service)should be included in product-cost estimates to achieve the above purpose? Why?


Definitions:

Financial Leverage

The use of borrowed funds to increase the potential return on investment, amplifying both gains and losses.

Profit Margin

A financial metric that measures the percentage of revenue that exceeds the costs of goods sold, indicating the efficiency in which a company turns sales into profits.

Sales

The total amount of goods or services sold by a company during a specified financial period.

Market/Book Ratio

A financial ratio that compares a company's market value to its book value, indicating how much investors are paying for each dollar of net assets.

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