What Is the Effect of Redefining the Business Mission of a Mattress

question 137

Multiple Choice

What is the effect of redefining the business mission of a mattress manufacturer as "a good night's sleep," rather than stating the mission as "the manufacture of high-quality mattresses"?

• A) It stifles creativity in discovering opportunities to serve customers.
• B) It is too broad a statement to be of any real use in serving customers.
• C) It helps ensure that the firm retains its focus on consumers and does not become preoccupied with its products and internal needs.
• D) It ensures that the core products will be retained.

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Definitions:

Variable Costing

A bookkeeping approach that incorporates only variable production expenses such as direct materials, direct labor, and variable manufacturing overhead into the costs of products.

Net Operating Income

A company's operating income after all operating expenses have been deducted from total revenue.

Variable Costing

A costing method that includes only variable costs - costs that vary with production levels - in the cost of goods sold and excludes fixed costs.

Net Operating Income

The profit generated from a company's everyday business operations, indicating the efficiency of management.