Exam 16: Pricing and Credit Decisions

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.

A trade credit bill of $80,000 with terms of sale of 2/10, net 30 means the buyer saves _____ if the bill is paid within the discount period.

Average pricing is an appropriate pricing approach for small businesses because the method takes into consideration both fixed and variable costs.

Match the term with its definition. -Demand that does not change significantly where there is a change in the price of a product or service

Match the term with its definition. -Analysis that requires the examination of cost-revenue relationships and the incorporation of sales forecasts

Troy Bourbon, a local bourbon distillery, initially sold its product at a premium price of $45 because the company believed consumers would view the bourbon as a prestige item. The company decided that when startup costs had been fully recovered and competition became imminent, the company would reduce the price to $30 which was more expected in the market. The distillery is using a

Match the term with its definition. -A categorization of accounts receivable based on the length of time they have been outstanding

Credit cards are an alternative to cash.

Match the term with its definition. -The difference between the unit selling price and the unit variable costs and expenses

Match the term with its definition. -An agreement between a buyer and a seller that allows for delayed payment for a product or service

The Consumer Credit Protection Act requires that a finance charge be stated as an annual percentage rate and that creditors specify their procedures for correcting billing mistakes.

Dennis has made a purchase of $50,000 using trade credit with terms of 2/15, net 45. How many days does he have in which to pay to receive the discount?

Match the term with its definition. -Privately owned organizations that collect credit information on businesses

List and briefly describe the five C's of credit.

Match the term with its definition. -A line of credit that allows the customer to obtain a product or service at the time of purchase, with payment due when billed

In today's competitive environment, a cash-only seller will outsell a credit-selling competitor.

Match the term with its definition. -A technique that uses a particular competitor as a model in setting prices

Match the term with its definition. -Sales volume at which total sales revenue equals total costs and expenses

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

Active Feet, a small manufacturer of shoes, hired an additional vice president and purchased a barrel of synthetic rubber used to make shoe soles. These two expenses should be considered a(n) _____ and a(n) _____, respectively.