Which of the following price adjustment strategies is designed to smooth production for the selling firm?
Answer(s): D
Seasonal discounts are designed to smooth production by the selling firm. For example, a ski manufacturer offers seasonal discounts to retailers in the spring and summer to encourage early ordering.
Company F produces and sells two products. Product A costs US $10 per unit and Product B costs US $5 per unit. Product A is selling very well, but sales of Product B are low. In order to increase sales of Product B, Company F has begun setting a price of US $13 for one of each.What is the pricing method?
Answer(s): A
Product-bundle pricing entails selling combinations of products at a price lower than the combined prices of the individual items. This strategy promotes sales of items consumers might riot otherwise buy.
Selling below cost in other countries is called:
Answer(s): C
Dumping, which refers to selling below cost in other countries, is an inappropriate pricing tactic that may trigger retaliatory tariffs and other sanctions.
All of the following are objectives of pricing except:
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?
Unit target operating income is US $125 10% $1,250 target price). Thus, the unit target full cost is US $1,125 $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).
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