All of the following are objectives of pricing except
Answer(s): D
Pricing objectives include>1. Profit maximization, which assumes that all firms select the price that results in the highest profit2. Target margin maximization, which is stated as a percentage ratio of profits to sales3. Volume-oriented objectives, which refers to setting prices to meet target sales volumes or market shares.4. image oriented objectives, which refers to setting prices to enhance the consumer's perception of the firm's merchandise mix5. Stabilization objectives, which refers to setting prices to maintain a stable relationship between the firm's prices and the industry leader's prices Price setting is not a factor in maximizing production.
Company P, which produces computers, uses a target pricing and costing approach. The following is Company P's costs and revenues for the year just ended:Company P plans to increase sales of computers to 15, 000 in the next year by reducing the unit price to US $1, 250. If Company P wishes to achieve a unit target operating income of 10%, by what amount must it reduce the full cost per unit?
Answer(s): C
Unit target operating income is US $125 10% $1, 250 target price). Thus, the unit target full cost is US $1, I25 $I, 250 $125). The current full cost per unit is US $1, 350 [($8, 000, 000 cost of goods sold + $5, 500, 000 operating costs excluding production) -- 10, 000 units sold], so the necessary reduction in full cost per unit is US $225 $1, 350 $1 .125).
Market-based pricing involves
Market-based pricing involves basing prices on the product's perceived value rather than on the seller's cost. f Jonprice variables in the marketing mix augment the perceived value. For example, a cup of coffee may have a higher price at an expensive restaurant than at a fast food outlet.
Value engineering is
Value engineering is a means of reaching targeted cost levels. It is a systematic approach to assessing all aspects of the value chain cost buildup for a product: R&D, design of products, design of processes, production, marketing, distribution, and customer service_ The purpose is to minimize costs without sacrificing customer satisfaction.
Company A is a producer of citrus flavored dessert products. Its most popular product is its key, lime pies, which are made with many fine ingredients, including egg yolks. Company A also sells the egg whites that are left over from its production process. These egg whites are sold at any price that is greater than the cost of storing and delivering them. What is the pricing of the egg whites?
Answer(s): A
By-product pricing usually sots prices at any amount in excess of storing and delivering by- products. Such prices allow the seller to reduce the costs and therefore the prices of the main products.
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