Eastlick Dairy invests in a new kind of frozen dessert called polar cream that b

Question

Eastlick Dairy invests in a new kind of frozen dessert called polar cream that becomes very popular. So many new customers come to the new store that the sales of existing ice cream products are also increased. The extra sales revenue: A. shold not be counted as incremental revenue for the project because the sales come from existing products. B. are synergistic effects that should be counted as incremental revenue for the project. C. are cannibalized sales that should be excluded from the analysis. D. should be included in the analysis, but the cost of the ice cream sold should not since that is a recurring expense.

Explanation / Answer

Eastlick Dairy invests in a new kind of frozen dessert called polar cream that becomes very popular. So many new customers come to the new store that the sales of existing ice cream products are also increased. The extra sales revenue:

A. shold not be counted as incremental revenue for the project because the sales come from existing products.

B. are synergistic effects that should be counted as incremental revenue for the project.-CORRECT ANSWER

C. are cannibalized sales that should be excluded from the analysis.

D. should be included in the analysis, but the cost of the ice cream sold should not since that is a recurring expense.

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