Which of the Following Is Not an Example of an External

question 45

Multiple Choice

Which of the following is not an example of an external threat to a company's future profitability?

• A) Likely entry of potent new competitors
• B) The lack of a well-known brand name with which to attract new customers and help retain existing customers
• C) Unfavorable shifts in buyer demographics and tastes
• D) Costly new regulatory requirements
• E) Increase in interest rates

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Definitions:

Actual Costs

The true expenses incurred in the production of a product or the provision of a service, as opposed to estimated or budgeted costs.

Material Variance

Material variance is the difference between the actual cost of materials used in the production process and the expected (or standard) cost, used to analyze and control costs in manufacturing.

Standard Cost

Standard cost is an estimated or predetermined cost of performing an operation, producing a good, or delivering a service, under normal conditions, used for budgeting and assessing performance.

Materials Price Variance

The difference between the actual cost and the standard cost of materials multiplied by the quantity purchased.