Question

If a menu item is estimated to bring in $300,000 in future earnings without doing any market research, but it is believed the earnings could be increased to $330,000 by spending $40,000 on research, then the marketing director should:

Answer 1

Answer:

A. Veto the research

Explanation:

The research should be vetoed or rejected because with the market research, estimated earnings becomes $10, 000 less than without market research. This is because when market research is done, estimated earnings becomes 330,000, but cost of market research is 40,000. This the company will have a net estimated earnings of $290,000.

Whereas, if they don't engaged in market research, they are expected to have an estimated earnings of $300,000.

Therefore, the market research should be vetoed.