Exam 16: Pricing and Credit Decisions

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.

Mark-ups may be expressed as a percentage of either the business's cost or the industry-standard cost.

Match the term with its definition.Some terms may not be used a.Ageing schedule b.Average pricing c.Bad-debt ratio d.Break-even analysis e.Break-even point f.Contribution margin g.Elastic demand h.Elasticity of demand i.Inelastic demand j.Value -The extent to which a good or service is perceived by a customer as meeting his or her needs or wants, measured by the customer's willingness to pay for it.

Which option is designed for long-term credit?

Trade-credit agencies collect credit information on business firms and consumers in a given area.

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

List and describe the three types 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.

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:

Discuss accounts receivable management methods in a small business.

Match the term with its definition.Some terms may not be used a.Consumer credit b.Credit bureaus c.Credit card d.Credit e.Instalment account f.Open charge account g.Revolving charge account h.Trade credit i.Trade credit agencies j.Value -Financing provided by suppliers to client companies.

To ensure prompt payment, a business extending credit should have adequate billing records and collection procedures.

Credit cards are usually based on a(n) ____ account system.

A business that has a gaming console intended to compete directly with Sony's Playstation gaming console would likely use a ____ pricing strategy.

Match the term with its definition.Some terms may not be used a.Consumer credit b.Credit bureaus c.Credit card d.Credit e.Instalment account f.Open charge account g.Revolving charge account h.Trade credit i.Trade credit agencies j.Value -Privately owned organisations that summarise a number of businesses' credit experiences with particular individuals.

The best pricing practice is to undercut competitors' prices.

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

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

Trade credit is extended to consumers purchasing large volumes of products.

How are the two components of total cost related to variable and fixed costs? Use a clothing retailer to illustrate the costs.