Pricing Decision and Cost Management

Major influences of competitors, costs, and customers on pricing decisions are factors of

• supply and demand

• activity-based costing and activity-based management.

• key management themes that are important to managers attaining success in their planning and control decisions.

• the value-chain concept

Short-run pricing decisions include

• pricing a main product in a major market

• considering all costs in the value chain of business functions

• adjusting product mix and volume in a competitive market while maintaining a stable price if demand fluctuates from strong to weak.

• pricing for a special order with no long-term implications

Burkhart Company manufactures a product that has a variable cost of $25 per unit. Fixed costs total $1,000,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 25 percent markup to full cost. How much should the selling price be per unit for 200,000 units?

• $31.25

• $42.00

• $37.50

• $30.00

The first step in implementing target pricing and target costing is

• choosing a target price

• determining a target cost.

• developing a product that satisfies needs of potential customers.

• performing value engineering

The best opportunity for cost reduction is during the

• manufacturing phase of the value chain.

• product or process design phase of the value chain.

• marketing phase of the value chain.

• distribution phase of the value chain.

Each month, Haddon Company has $275,000 total manufacturing costs (20 percent fixed) and $125,000 distribution and marketing costs (36 percent fixed). Haddon’s monthly sales are $500,000.

The markup percentage on full cost to arrive at the target (existing) selling price is

• 25 percent.

• 75 percent.

• 80 percent.

• 20 percent.

Each month, Haddon Company has $275,000 total manufacturing costs (20 percent fixed) and $125,000 distribution and marketing costs (36 percent fixed). Haddon’s monthly sales are $500,000

The markup percentage on variable costs to arrive at the existing (target) selling price is

• 20 percent.

• 40 percent.

• 80 percent.

• 66 2/3 percent.

The price of movie tickets for opening day and the few days following compared to the price six months later is an example of

• price gouging.

• peak-load pricing.

• dumping.

• demand elasticity.

Price discrimination is

• always illegal.

• a type of peak-load pricing.

• not regulated in the United States.

• the practice of charging different prices to different customers for the same product or service.

Which of these do antitrust laws on pricing not cover?

• Collusive pricing

• Dumping

• Peak-load pricing

• Predatory pricing