Exam 18: Pricing and Profitability Analysis

Predatory pricing and dumping are outlawed practices that set prices below cost intending to injure competitors.

When a company charges different prices for the same product to different customers it is referred to as price __________ .

Octagonal Company has the following information for 2018: Selling price \ 150 per unit Variable production costs \ 40 per unit produced Variable selling and admin. expenses \ 16 per unit sold Fixed production costs \ 200,000 Fixed selling and admin. expenses \ 140,000 Units produced 10,000 units Units sold 8,000 units There were no beginning inventories. What is the ending inventory for Eastwood using the absorption costing method?

New England businesses were trying to sell lumber for 50 percent above their regular prices right after 2011 hurricane Irene hit. This is an example of:

The following information pertains to Cumberland Corporation: Beginning inventory 0 units Ending inventory 6,000 units Direct labor per unit \ 20 Direct materials per unit 16 Variable overhead per unit 4 Fixed overhead per unit 10 Variable selling costs per unit 12 Fixed selling costs per unit 16 Absorption costing net income would be how much greater or less than the variable costing net income?

Price elasticity of demand is the percent change in price demanded for a given percent change in quantity.

The contribution margin variance is the difference between the actual contribution margin and the:

Too much emphasis on short-run optimization can lead to __________ problems.

Profit-related variances focus on the difference between budgeted and actual prices, volumes, and contribution margin.

The pricing of a new product at a low initial price to build market share quickly is called:

The contribution margin variance is favorable if the budgeted contribution margin is less than the:

Monopolistic competition is best defined as

Hornitos Company produced 30,000 units and sold 29,000 units in 2018. Beginning inventory was zero. During the period, the following costs were incurred: Indirect labor \ 60,000 Indirect materials 30,000 Other (variable overhead) 90,000 Fixed manufacturing overhead 180,000 Fixed administrative expenses 150,000 Fixed selling expenses 120,000 Variable selling expenses, per unit 40 Direct labor, per unit 80 Direct materials, per unit 20 Required: Compute the dollar amount of ending inventory using: a.Absorption costing b.Variable costing

The variance that compares actual volume with expected volume multiplied by expected price is the __________ variance.

The variances used to analyze changes in profit from one period to another are called __________ variances.

The biggest limitation to profitability analysis is its focus on past, not future performance.

All of the following costs are included in inventory under absorption costing EXCEPT

The Lancashire Corporation manufactures bottled water with an average manufacturing cost of $2 per case (a case contains 24 bottles). Bayview sold 1,000,000 cases last year to the following types of customers: USTOMER PRICE PER CASE CASES SOLD Drugstore chains \ 5.00 375,000 Gas station chains \ 5.50 125,000 Supermarket chains \ 6.50 500,000 Local pharmacies \ 6.00 250,000 The drugstore chains have special handling costs of $0.20 a case and increased administrative assistance costing $45,000 per year. The gas station chains require special marketing promotions that cost $50,000. Sales commissions of 10% are paid. The supermarket chains order electronically through EDI which costs $25,000 annually. Bayview is responsible for shipping costs, which totaled $0.50 a case and special labels costing $0.02 per bottle Local pharmacies have special handling costs of $0.10 per case and sales commissions are paid to agents costing $0.25 per case. Bad debt expense averages 10% of sales. What is the profit per case for drugstore chains?

Which of the following markets is characterized by the following: only a few firms in the industry, a fairly unique product, difficult entry into the industry, and spending for differentiation of the product?

Which of the following is true regarding expenses related to specific market structure types?