Exam 16: Pricing and Credit Decisions

In conducting a comprehensive break-even analysis,a firm must examine both its revenue-cost relationships and sales forecasts.

What would be the break-even point in units for a firm selling trekking poles at a selling price of $130 per pair,variable cost per set is $70,and fixed costs are $100,000?

Quality Cars,an independent used-car dealership,utilizes long-term consumer credit in its business.Typically,consumers are allowed to place a 15 percent down payment on an automobile.Then,over a period of 48 months,the consumer is allowed to make payments on the balance of the account,which includes compound interest of 2 percent monthly on the unpaid portion.Quality Cars is employing ____ in its business.

Bank credit cards are widely accepted by retailers who desire to offer credit but do not have their own credit cards.

If a small business has products that compete with one another,pricing decisions must take into account the effects of a single product price on the rest of the line.

Because small businesses are small by definition,pricing and credit considerations are relatively unimportant to their overall performance.

Match the term with its definition.Some terms may not be used. a.Product line pricing b.Average pricing c.Follow-the-leader pricing d.Markup pricing e.Freemium strategy f.Prestige pricing g.Price lining strategy h.Price i.Skimming price strategy j.Value k.Variable pricing strategy -An approach in which the total cost for a given period is divided by the quantity sold in that period to set a price

The Golf Global Company sells 1,000 shirts annually at a price of $35 each.If the company's pricing policies adhere to a 40% markup of selling price,the cost of each shirt is

Guy owns a lumber yard working directly with home builders and contractors.Margie,a contractor new to the area,wants to set up a credit account with the lumber yard.She has a good history of successful and profitable projects.What questions should Guy ask in evaluating the Margie's credit status? Relate to the 5 C's of credit.

Prestige pricing (setting a high price to convey an image of high quality or uniqueness)is a pricing tactic that reflects competitive advantage.

Stone Creek Farm sells a special type of hay to horse owners.If the farm allows its customers to have hay delivered and then be billed at a later date,it would be using which type of account?.

Match the term with its definition.Some terms may not be used. a.Product line pricing b.Average pricing c.Follow-the-leader pricing d.Markup pricing e.Freemium strategy f.Prestige pricing g.Price lining strategy h.Price i.Skimming price strategy j.Value k.Variable pricing strategy -A technique that sets more than one price for a product or service in order to offer price concessions to certain customers

Hollywood Amusement,a small independent movie theater,decreased the price of admission from $10 to $9.Prior to the price decrease,the business sold 1,000 tickets each month.After the price decrease,it experienced ticket sales of 1,500 a month.If the change in sales is attributable only to the change in price,Hollywood Amusement faces ____ for its movie tickets.

Match the term with its definition.Some terms may not be used. a.Consumer credit b.Credit bureaus c.Credit card d.Credit e.Installment account f.Open charge account g.Revolving charge account h.Trade credit i.Trade credit agencies j.Value -An alternative to cash whose use provides assurance to a seller that a buyer has a satisfactory credit rating and that payment will be received from the issuing financial institution

List and describe the three types of credit.

When she uses her American Express card,Cathy obtains possession of goods or services when they are purchased.Payment is due when billed at a later date.American Express is a type of:

Because it is a standard practice for many business types,selling on credit cannot often be avoided.

A revolving charge account would be typical for larger purchases;smaller purchases are typical on installment accounts.

The aging schedule is a categorization of accounts receivable based on the length of time they have been outstanding.

The seller's measure of what he or she is willing to receive in exchange for transferring ownership or use of a product or service is