A decrease in the sales of a current project because of the launching of a new project is
A)an overhead expense.
B)irrelevant to the investment decision.
C)a sunk cost.
D)cannibalisation.

Question

Quizplus · Accepted Answer

The decrease in sales of a current project because of the launching of a new project is known as cannibalisation, which refers to a situation where a company's new product or service eats up the sales and revenues of its existing products or services. This phenomenon can impact the overall profitability of the company and should be considered while making investment decisions. Thus, option D is the correct answer. Option A is incorrect as it refers to a fixed expense that a company incurs regardless of its production output. Option B is incorrect as the decrease in sales is relevant to investment decision-making. Option C is incorrect as sunk costs refer to the costs that have already been incurred and cannot be recovered.

A Decrease in the Sales of a Current Project Because