The table represents the breakdown of cost structure, which is constructed based on the information of Zara case. What is the worst interpretation regarding the table below? Representative Competitor Zara Posted Selling Price 100.0 100.0 -Markdown -10.5 -2.6 Retail Selling Price (RSP) =89.5 =97.4 - Manufacturing Cost -44.8 -51.1 Gross Margin =44.7 =46.3 - Advertising -3.1 -0.3 Advertising-adjusted Margins =41.6 =46.3 (a) Zara has the lower markdown and advertising cost than its competitors because of its entry-timing decision (i.e., entering the market later until the demand uncertainty is substantially resolved). (b) Zara has higher manufacturing cost than its competitors because of its speed decision (i.e., shorter cycle from design to retail). (c) Zara realizes its cost leadership because the cost decreases in markdown and advertising are greater than the cost increases in manufacturing cost. (d) Zara realizes its cost leadership because of its speed decision, not because of its entry-timing decision.

The table represents the breakdown of cost structure, which is constructed based on the information of Zara case. What is the worst interpretation regarding the table below? Representative Competitor Zara Posted Selling Price 100.0 100.0 -Markdown -10.5 -2.6 Retail Selling Price (RSP) =89.5 =97.4 - Manufacturing Cost -44.8 -51.1 Gross Margin =44.7 =46.3 - Advertising -3.1 -0.3 Advertising-adjusted Margins =41.6 =46.3 (a) Zara has the lower markdown and advertising cost than its competitors because of its entry-timing decision (i.e., entering the market later until the demand uncertainty is substantially resolved). (b) Zara has higher manufacturing cost than its competitors because of its speed decision (i.e., shorter cycle from design to retail). (c) Zara realizes its cost leadership because the cost decreases in markdown and advertising are greater than the cost increases in manufacturing cost. (d) Zara realizes its cost leadership because of its speed decision, not because of its entry-timing decision.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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