On What Assumption Is the BCG Portfolio Model Based

question 3

Multiple Choice

On what assumption is the BCG Portfolio Model based?

• A) Profitability and cash flow will be closely related to sales volume.
• B) Return on investment (ROI) will be directly related to sales volume.
• C) Cash flow is equal to investment.
• D) Investment + Cash flow = Profitability.

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Definitions:

Overhead Cost

Expenses related to the operation of a business that cannot be directly traced to a specific product or service, such as rent, utilities, and administrative costs.

First Stage Allocations

The initial process of distributing overhead costs to various cost pools or departments in activity-based costing.

Activity Rate

The cost driver rate in activity-based costing used to assign costs to cost objects, based on each cost object's usage or creation of costs.

Processing Activity

Refers to operations or work performed in a systematic sequence to alter materials or information.