Exam 16: The Art and Science of Pricing to Optimize Revenue

Pfizer Inc., Meridian Medical Technologies Inc., and King Pharmaceuticals LLC worked together in a 10-year period to increase the price of a single Epipen from $100 to over $600. This is an example of what pricing practice?

In considering a special order in the short-run, managers can typically make a decision after comparing

Holiday Hosting Company has the following per unit information available for its new product: What would Holiday Hosting Company's markup percentage be using a cost-plus pricing approach on total cost?

Summer Splash wants to produce and sell a new fruit-flavored soda. To enter the market, the soda will have to sell at $1.75 per 12 oz. can. The data below has been collected. a. What is the target cost per can of soda? b. If expected annual sales were to decrease from 50,000 to 48,000 cans, what would the new target cost be?

What is the difference between price gouging and price fixing (collusive pricing)?

Companies that have the power to influence the market price, and thus, enjoy pricing power are referred to as price

What is value engineering as it relates to target costing?

Nguyen Corporation has collected the following data concerning one of its products: What is the return on investment (ROI) percentage for Nguyen Corporation for its product?

The cost-plus method for pricing is a(n)

Magnacom Inc. produces a product, with a normal selling price of $35.00 per unit. The variable costs are $22.00 per unit. Fixed costs are $40,000 for a normal production run of 10,000 units per month. The company has received a request for a special order that would not interfere with normal sales. The order is for 3,500 units and a special price of $24.00 per unit. Magnacom Inc. has the capacity to handle the special order and, for this order, a variable selling cost of $2.00 per unit would be eliminated. If the special order is accepted, what will the effect be on Magnacom Inc.'s income?

A company should

Given below are business practices related to pricing situations, Match the descriptions with the appropriate pricing term -Charging a different price to different consumer segments for the same product/service.

The primary decision for special orders is determining whether

Palm Furniture manufactures outdoor patio sets with the following unit selling price and unit costs at capacity of 5,000 units: A wholesale outlet has offered to purchase 300 outdoor patio sets but is not willing to pay the retail price of $1,300. What is the lowest price that Palm Furniture should accept if it is currently operating at full capacity and is unable to add additional capacity?

To achieve a target unit cost, management usually undertakes a business process called

Price-dumping happens when

When a business charges exorbitant prices for necessities, typically in the aftermath of a natural disaster or pandemic, it is referred to as

Canine Creations produces treats for dogs called "bark-bites." It currently sells the treats nationally at a price of $15 per bag, with a unit variable cost of $4 and total fixed costs of $2,200 per month. A local organic pet store has requested a special order of 250 "bark-bites" treat bags but would like them to be gluten-free. The flour that would be required to make the special-order treats would add an additional $1 to each bag of treats. Since the company is currently operating at full capacity, it would have to add production capacity which would add $500 to the current fixed costs. What is the minimum special-order price that Canine Creations would be willing to accept for a bag of "bark-bites?"

Explain the following statement: "Pricing relies heavily on perception."

Explain what a "price taker" is and how unit prices are determined for a price taker.