A Manufacturer of Peripheral Devices for PCs Decides to Try

question 72

Multiple Choice

A manufacturer of peripheral devices for PCs decides to try and capture some of the PC gaming market by creating gaming versions of its traditional peripheral devices. It decides to start with a gaming version of its standard keyboard, increasing the number of macro keys, adding a small LCD screen to display game data, and giving the user the ability to backlight keys in different colors. If this device is a success, the manufacturer plans to release gaming versions of its trackballs and other peripherals. What option is the manufacturer gaining by the release of the new keyboard?

• A) option to delay
• B) option to expand
• C) option to abandon
• D) option to switch

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Definitions:

Contribution Margin

The remaining amount of revenue after variable costs have been subtracted, indicating how much revenue is contributing to fixed costs and profits.

Incremental Manufacturing Cost

The additional cost incurred to produce an extra unit of output, excluding fixed costs.

Contribution Format

A method of income statement preparation that separates fixed costs from variable costs.

Traditional Format

A conventional method of presenting financial statements or information, typically focusing on separating costs into fixed and variable categories.