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The Super Project:
Which are relevant costs for General Foods Corporation to use in evaluating the Super Project among the four criteria listed below? Assume that if the project were charged with any of the expenses below (now, later, full or partial), it would not meet the financial hurdles and would not be undertaken:
· Test Market Expenses? ...
Test Marketing Expense:
The test marketing expenses are sunk costs and therefore, should not be relevant to the decision of whether or not to move forward with the Super Project. ...
Furthermore, the "market test cost" would be part of the overhead, allocated to the company in general and thus should not be charged to this specific project. ...
For example, the test market expense could not be allocated to the Super brand product if the test failed. GF would not proceed with the project if the market test was not favorable, so it could not recover the cost based on the product’s sales. ... However, overhead expenses should be allocated and factored into the costs of the Super Project (despite the usage of a pre-existing agglomerator) because Super Project will incur its own administrative and marketing costs, independent of Jell-O.
Approximate Word count = 806
Approximate Pages = 3.2
(250 words per page double spaced)
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