Jennifer Jones included the cost of test marketing before production in the calculation of the initial outlay.Apparently, Jennifer does not understand the concept of

Question

Quizplus · Accepted Answer

Test marketing costs are sunk costs, which means they are already incurred and cannot be recovered. Including them in the calculation of initial outlay is not appropriate as they do not affect the future cash flows associated with the project.

Jennifer Jones Included the Cost of Test Marketing Before Production