Question

The Shoe Box is considering adding a new line of winter footwear to its product lineup. When analyzing the viability of this addition, the company should include all of the following in its analysis with the exception of________________.
A)any expected changes in the sales levels of current products caused by adding the new productline.
B)cost of new display counters for the additional winter footwear.
C)increased taxes from winter footwear profits.
D)the research and development costs to produce the current winter footwear samples.
E) the expected revenue from winter footwear sales.

Answer 1

Answer:

D)the research and development costs to produce the current winter footwear samples.

Explanation:

Research and development costs associated with the current winter footwear samples will not impact the performance of the proposed new line.

When analyzing the viability of the new product line up, the company should only consider the projected expenses and revenues arising from the project. A project is viable if its benefits outweigh its shortcomings. One way of establishing viability is by doing a cost-benefit analysis.

For the Shoe Box company, the new project line may have some effects on the sales of current products. The new projects will demand new counters. The company must also consider expected revenues and taxes. All these have elements of cost and benefits directly associated with the proposed product line.