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Exam 13: Pricing Products and Services

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Question 81

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A custom kitchen cabinet storeowner wishes to use target profit pricing to establish a price for a typical section of cabinets.Assume variable cost is $200 per unit,fixed cost is $44,000,and the storeowner desires a target profit of 20 percent of sales on an annual volume of 400 cabinets.What price should be charged for a typical cabinet section?

A) $311.00
B) $372.00
C) $387.50
D) $395.75

E) C) and D)
F) B) and D)

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Question 82

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Setting the highest initial price that customers really desiring the product are willing to pay is:

A) skimming pricing.
B) penetration pricing.
C) price lining.
D) odd-even pricing.

E) None of the above
F) B) and D)

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Question 83

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Describe a pricing objective used by many Japanese firms.

Sears sets their prices to achieve a 19 percent profit margin on forecasted 2015 sales of $25.8M.This is an example of:

Ace Shoe Co.has fixed costs of $6 million and unit variable costs of $5 per pair.Suppose a consultant tells Ace it can sell 700,000 pairs of shoes,it should seek a profit of $2.5 million,and it should select an appropriate price to meet that 700,000 target.What potential error is the consultant making?

A new soft drink company sells their cola product at $0.25 a bottle in vending machines,rather than the traditional $1.50 per bottle of the same size.This is an example of:

Which cost-based pricing method entails adding a fixed percentage to the cost of all items in a specific product class?

To reduce the price sensitivity for some of its products,Washburn uses

Pepsi has found that consumers will purchase ten cases of Pepsi One at $5.00 a case,twelve cases at $4.00 a case,and fifteen cases at $2.50 a case.The next logical step for Pepsi is to generate a(n) ___________ based on this data.

What are the six broad objectives that an organization may pursue which tie in directly to the organization's pricing policies?

TB Figure: 1 -TB Figure 1 represents the six distinct steps in the pricing process.Cell "C" represents the step at which a firm would

When Volkswagen first sold their Jetta TDI vehicles,they were manufacturing them in lots of 10,000.After realizing the high demand for the vehicle,they increased their manufacturing volume to lots of 25,000,and,in-turn,lowered the price of the vehicle by $2,500,because of increased efficiencies calculated by manufacturing more.By selling at a lower price,Volkswagen is engaging in:

Companies have found that using social media can reduce customer service and support costs.Assuming all else is equal,implementing a social media program may help companies increase their:

When General Mills divides the sales revenue in a single year obtained by all its breakfast cereals by the breakfast cereal sales of all its competitors plus its own for that same year,it is calculating its:

How do consumers use price as an indicator of value?

What are the two general methods for quoting prices related to transportation costs? Explain how each is used.

List four key factors used to estimate demand.

Newsweek ran a pricing experiment that involved setting different prices for its magazine in different cities and counting the number of units sold.After adjusting for factors like the population of the different cities,Newsweek could plot these prices and units to result in a:

After purchasing a bushel of 'C' grade apples for $10,which were on sale,you get home and realize that they are of excellent quality,and should have been graded 'B+' apples instead.You feel you received great benefits in comparison to the price you paid.This ratio is called:

Leupold & Stevens,Inc.,makes Leupold scopes for rifles and has introduced a new scope that has the quality and performance for which Leupold & Stevens is famous,at a price much lower than it has ever sold a rifle scope before.The new scope offers several different magnifications and is the only scope in the $200 range that is made in Canada.Which pricing strategy is Leupold & Stevens using to appeal to a larger market?