Exam 20: Pricing and Product Mix Decisions

Linear programming is useful:

Which of the following statements regarding price is/are true? i. Prices are determined by the market, subject to the constraint that costs must be covered in the long run. ii. Prices are based on costs, subject to the constraint that customers and competitors will exert an influence. ii. A balance of market forces and cost is important when making pricing decisions.

Price skimming is when:

Tots N Style Pty Ltd has the following data concerning a decorator playpen it manufactures: If the company uses cost-plus pricing based on total variable costs, determine the mark-up percentage used by the company to obtain a price of $105.

Influences on pricing decisions Two of the major influences on pricing decisions are customer demand and the actions of competitors. i. What are the other two major influences? ii. Briefly describe customer demand and actions of competitors. iii. In the text example, Sydney Sailing Supplies faced the question of defining its own products narrowly as sailing supplies or more broadly as boating supplies. Explain why these definitions could influence how the management of Sydney Sailing Supplies views either 'customer demand or actions of competitors'.

The total revenue curve:

In the economic profit-maximising pricing model, how do the total revenue and total cost curves generally behave?

It is illegal for companies to offer different prices to different customers for the same goods or services, except:

Sample Company reported the following costs during 2008 for the manufacture and sale of 2000 units: The average amount of capital invested in the product line during the year was $500 000 and the targeted return on investment was 20 per cent. If Sample's price per unit was $245 and the mark-up percentage was 53 per cent, what pricing formula was used by the company?

If a firm uses a traditional volume-based product costing system low-volume and complex products are likely to be overcosted.

Price elasticity is the term used to describe the impact of price changes on sales volume.

How are the time charges calculated?

The Houston Company manufactures office equipment. They are ready to introduce a new line of desktop copiers. The following data concerns the copiers: If the company uses cost-plus pricing based on absorption cost, what price must the company charge when the mark-up percentage is 120 per cent?

In linear programming, the objective function is typically based on:

The demand curve is also called the:

The optimal decision in the linear programming model depends on:

When a prestigious company engages in a price cutting campaign to gain market share, this can negatively impact their:

Which of the following statements regarding the profit maximising model is/are true? i. The profit maximising model is limited because a firm's demand and marginal revenue are difficult to discern. ii. The marginal revenue and marginal cost model is valid for all forms of market. iii. Costing systems are not usually designed to measure the marginal changes in cost incurred as production and sales increase unit by unit.

Which of the following statements about prices is false?

Which of the following statements about time and material pricing is/are true? i. The labour charge includes the direct cost of the employee's time. ii. The labour charge includes a charge to cover various overhead costs. iii. The labour charge includes a handling charge for material.