Week 6 Segment Reporting 2 - Therefore the profits on what...

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I think the key here would be demand. Companies have to be sure to stay within the demand needs of their customers, to avoid having a surplus of supplies. If a company ends up with a large amount of a product that they cannot sell then all the cost they put into that product are now sunk costs. There may be several other factors that come into play as well. The other product that does not sell quite as well may be cheaper to make.
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Unformatted text preview: Therefore, the profits on what they do sell of the product may not be expendable. It all boils down to a number game. Make as much of a product as you can, but only enough to sell and make the largest profit. All companies have to take their production costs into account. It is not as simple as just make more of what sells the best....
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This note was uploaded on 03/26/2012 for the course AC505 AC505 taught by Professor Dillan during the Spring '10 term at Keller Graduate School of Management.

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