Which of the following pricing policies involves the selling company setting freight charges to customers at the actual average freight cost?
Answer(s): B
In uniform delivered pricing, the company charges the same price, inclusive of shipping costs, to all customers, regardless of their location. This price is the company's average actual freight cost. Thus, both nearby and distant customers are charged the same amount. This policy is easy to administer, permits the company to advertise one price nationwide And facilitates marketing to faraway customers.
A seller's price is below an appropriate measure of casts. Moreover, the seller has a reasonable prospect of recovering the resulting loss in the future through higher prices or a greater market share. Accordingly, the seller has engaged in:
Answer(s): C
Predatory pricing is intentionally pricing below cost to eliminate competition and reduce supply. Federal statutes and many state laws prohibit the practice. The U.S. Supreme Court has held that pricing is predatory when two conditions are met: 1) the seller's price is below an appropriate measure of its costs," and 2) it has a reasonable prospect of recovering the resulting IOSS through higher prices or greater market share.
In which product-mix pricing strategy is it appropriate for the seller to accept any price that exceeds the storage and deliver} casts for the product?
Answer(s): A
A by-product is a product of relatively minor importance generated during the production of one or more other products. Its production entails no additional costs. Any amount received above the storage and delivery. casts for a by-product allows the seller to reduce the main product's price to make it more competitive.
Several surveys paint out that most managers use full product casts, including unit fixed casts and unit variable costs, in developing cast-based pricing.Which one of the following is least associated with cost-based pricing?
A target price is the expected market price of a product, given the company's knowledge of its customers and competitors. Hence, under target pricing, the sales price is known before the product is developed. Subtracting the unit target profit margin determines the long-term unit target cast. If cost-cutting measures do not permit the product to be made at or below the target cast, it will be abandoned.
Fulford Company applies the target pricing and costing approach. The following information about costs and revenues of Fulford's product are available for the year just ended:Fulford plans to increase unit sales to 80,000 by reducing the product's unit price to US $320.If Fulford desires a unit target operating income of 12CYo, by what amount must it reduce the full cost per unit?
Unit target operating income is US $38.40 $320 unit target price 12°X0). Hence, the unit target full cost is US $281.60 $320 - $38.40). The current full cost per unit is US $352.00 [($13,200,000 CGS + $7,920,000 other value chain operating costs) - 60,000 units sold], so the necessary reduction in the full cost per unit is US $70.40 $352.00 - $281.60).
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