Question
The firm Forgotten Legends produces specialty eleven-sided dice as well as a related product: role-playing games. Specialty eleven-sided dice have $151,000 in revenue, and role-playing
The firm Forgotten Legends produces specialty eleven-sided dice as well as a related product: role-playing games. Specialty eleven-sided dice have $151,000 in revenue, and role-playing games have $2,000,000 revenue.
Costs for specialty eleven-sided dice are $275,000, and costs for role-playing games are $1,750,000.
If the firm drops specialty eleven-sided dice, then revenue for role-playing games will decrease by 5%. The firm cannot avoid $10,000 of the cost of producing specialty eleven-sided dice.
The firm's specialty eleven-sided dice are an important part of the firm's differentiation strategy.
Which of the following is TRUE?
a. | This firm's differentiation strategy is irrelevant. | |
b. | Because the firm's strategy is differentiation, there are THE SAME recommendations for both strategic cost analysis and relevant cost analysis. | |
c. | There is not enough information to conduct either relevant cost analysis or strategic cost analysis in this problem. | |
d. | Because the firm's strategy is differentiation, there are DIFFERENT recommendations for strategic cost analysis and relevant cost analysis. |
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