The initial margins for a new line of cosmetics that Kim has developed are slim due to development costs. She is wondering whether they will improve with economies of scale. Which of the following product development trade-offs is Kim dealing with?
A) Product cost vs. development costs
B) Features vs. schedule
C) Features vs. development costs
D) Features vs. product cost
E) Product cost vs. capital expenditures

Question

Quizplus · Accepted Answer

Kim is dealing with the trade-off between product cost and development costs. Initially, the margins are slim due to high development costs, but she anticipates that these costs will be spread out as production scales up, potentially improving margins. This reflects the classic trade-off between the initial investment in developing a product and the unit cost of producing that product.

The Initial Margins for a New Line of Cosmetics That