Question 1

Which of the following best explains 'target-return pricing'? 
A) Price is based on expected demand for the product. 
B) Price is based on the amount of profit that should be realized. 
C) Price is based on the importance of the customer to the supplier. 
D) Price is based on expected supply of the product.

Accepted Answer

Target-return pricing sets a price based on the amount of profit that should be realized. The company determines the rate of return it desires on its investment and sets a price that will give this return based on an estimated volume of sales.

Question 2

Which of the following is not an internal factor influencing the purchase price? 
A) Socio-political. 
B) Logistics. 
C) Technical. 
D) Organizational.

Accepted Answer

Sociopolitical factors are external factors that can influence the purchase price, while logistics, technical, and organizational factors are internal factors that can affect the purchase price.

Question 3

Which of the following best explains external factors? 
A) Those factors about which the supplier can exert control. 
B) Those factors about which the purchaser cannot exert control. 
C) Those factors about which the purchaser can exert control. 
D) Those factors about which the supplier cannot exert control.

Accepted Answer

D

Question 4

Which of the following best explains 'perceived value pricing'? 
A) Price is based on what the market can bear. 
B) Price is based on the amount of profit that should be realized. 
C) Price is based on the importance of the customer to the supplier. 
D) Price is based on expected supply of the product.

Accepted Answer

Perceived value pricing is a pricing strategy where the price is based on what the market is willing to pay or can bear. It considers the customer's perceived value of the product or service rather than the cost of production or the profit the supplier wants to make.

Question 5

Which of the following best explains 'value pricing'? 
A) Price is based on what the market can bear. 
B) Price is based on the amount of profit that should be realized. 
C) Price is based on the importance of the customer to the supplier. 
D) Fairly low prices for high quality offerings.

Accepted Answer

Value pricing refers to the strategy of offering high quality products or services at relatively low prices, in order to appeal to more price-sensitive customers who still want good value for their money. This approach is focused on providing a high-quality experience to customers and making it accessible to as many people as possible. Therefore, option D is the most appropriate choice.

Question 6

Which of the following best explains 'going rate pricing'? 
A) Price is based on competitor prices. 
B) Price is based on the amount of profit that should be realized. 
C) Price is based on the importance of the customer to the supplier. 
D) Fairly low prices for high quality offerings.

Accepted Answer

Going rate pricing is when a price is based on competitor prices. It is a common pricing strategy in competitive markets where pricing decisions are influenced by the prices charged by rivals.

Question 7

Which of the following is not an internal factor influencing the purchase price? 
A) Technological. 
B) Logistics. 
C) Technical. 
D) Organizational.

Accepted Answer

Technological is not an internal factor influencing the purchase price as it relates more to external factors such as advancements and innovations in technology. Logistics, technical, and organizational factors are internal factors that can impact the purchase price, such as efficient supply chain management, specialized technical requirements, and organizational structure and policies.

Question 8

Which of the following is not an example of market circumstances? 
A) Demand. 
B) Supply. 
C) Political factors. 
D) Cost price.

Accepted Answer

Market circumstances refer to the external factors that impact the demand and supply of a product or service. Cost price, on the other hand, is an internal factor that is within the control of the business and not an external market circumstance. Therefore, option D is not an example of market circumstances.

Question 9

Which of the following is not a factor influencing the fixing of the selling price? 
A) Expected demand for the product. 
B) The expected development of the cost price per product unit. 
C) The importance of the customer to the supplier. 
D) Exchange rates.

Accepted Answer

Exchange rates do not directly influence the fixing of the selling price of a product. The other factors mentioned, such as expected demand, cost price development, and customer importance, are all important considerations when determining the appropriate selling price.

Question 10

Which of the following best explains cost-based pricing? 
A) A particular profit margin is added to some costs, including the cost of sales. 
B) A particular profit margin is added to all costs, including the cost of sales. 
C) A particular profit margin is added to the cost of sales. 
D) A 5% profit margin is added to the cost of sales.

Accepted Answer

Cost-based pricing involves adding a specific profit margin to all costs associated with a product or service, including the cost of sales, to determine its selling price. This method ensures that all costs are covered and a profit is made.

Question 11

Which of the following best explains 'the supplier's specification'? 
A) The buyer knows precisely the cost of the material to be purchased. 
B) The seller knows precisely the cost of the material to be purchased. 
C) The buyer can only obtain a rough indication of the product's cost by means of demand market research. 
D) The buyer can only obtain a rough indication of the product's cost by means of supply market research.

Accepted Answer

The answer of Which of the following best explains 'the...

Question 12

Which of the following best explains mark-up pricing? 
A) A particular profit margin is added to some costs, including the cost of sales. 
B) A particular profit margin is added to all costs, including the cost of sales. 
C) A fixed percentage mark-up is added to the cost price. 
D) A 5% profit margin is added to the cost of sales.

Accepted Answer

Markup pricing involves adding a fixed percentage mark-up to the cost price of a product or service to arrive at the selling price. This means that the profit margin may vary depending on the cost of goods sold, but the percentage markup remains fixed. Option A and B describe variable markup pricing, where the profit margin added varies based on different costs. Option D describes a specific profit margin, but it is not necessarily a mark-up and its percentage is not fixed.

Question 13

Which of the following best explains market-based pricing? 
A) A particular profit margin is added to some costs, including the cost of sales. 
B) The price of the product is determined by the market and is generated exclusively by market circumstances. 
C) A fixed percentage mark-up is added to the cost price. 
D) A 5% profit margin is added to the cost of sales.

Accepted Answer

Market-based pricing refers to the process of pricing a product based on the prevailing market conditions, i.e., supply and demand. The price is not determined by costs or profit margins but solely by market circumstances.

Question 14

Which of the following is not an external factor influencing the purchase price? 
A) Economic. 
B) Socio-political. 
C) Technological. 
D) Technical.

Accepted Answer

Technical factors are typically internal factors that may affect the cost of production, but not necessarily the purchase price for the consumer. Economic, socio-political, and technological factors are all external factors that can influence the purchase price.

Question 15

Which of the following best explains 'the customer's specification'? 
A) The buyer knows precisely the cost of the material to be purchased. 
B) The buyer can only obtain a rough indication of the product's cost by means of supply market research. 
C) The buyer can only obtain a rough indication of the product's cost by means of demand market research. 
D) The buyer knows precisely the profit margin on the material to be purchased.

Accepted Answer

The customer's specification refers to the specific requirements or details that the buyer has for a particular product or material they want to purchase. This may include details such as the product's dimensions, materials, features, or functions. Knowing the cost of the material is an important aspect of the customer's specification as it helps them determine whether the product they want to buy fits within their budget.

Question 16

Which of the following is not a factor influencing the fixing of the selling price? 
A) Expected demand. 
B) Number of competitors in the market. 
C) The customer's order volume. 
D) Exchange rates.

Accepted Answer

Exchange rates may play a role in the costs incurred for production or materials, but they are not a direct factor in determining the selling price.

Question 17

Which of the following is not an external factor influencing the purchase price? 
A) Economic. 
B) Socio-political. 
C) Technological. 
D) Organizational.

Accepted Answer

Organizational factors refer to internal factors such as the company's policies, procedures, and structures, and do not affect the purchase price externally. The other options (economic, socio-political, and technological) are all external factors that can impact the purchase price.

Question 18

Which of the following best explains internal factors? 
A) Those factors about which the supplier can exert control. 
B) Those factors about which the purchaser cannot exert control. 
C) Those factors about which the purchaser can exert control. 
D) Those factors about which the supplier cannot exert control.

Accepted Answer

Internal factors are those factors about which the supplier can exert control.

Question 19

Which of the following is not an internal factor influencing the purchase price? 
A) Economic. 
B) Logistics. 
C) Technical. 
D) Organizational.

Accepted Answer

Economic factors typically refer to external market conditions, such as supply and demand, inflation, and interest rates. Therefore, economic is not an internal factor influencing purchase price. Logistic, technical, and organizational factors are internal factors that can impact the purchase price.

Question 20

Which of the following is not an external factor influencing the purchase price? 
A) Economic. 
B) Socio-political. 
C) Technological. 
D) Logistics.

Accepted Answer

Logistics is not an external factor that influences the purchase price, as it mainly deals with the efficient movement of goods and materials within a company's supply chain. Economic factors and changes in socio-political conditions can affect pricing strategies, and advancements in technology can impact production costs and pricing decisions.

Quiz 14: Cost Approaches and Techniques

Which of the following best explains 'target-return pricing'?

Which of the following is not an internal factor influencing the purchase price?

Which of the following best explains external factors?

Which of the following best explains 'perceived value pricing'?

Which of the following best explains 'value pricing'?

Which of the following best explains 'going rate pricing'?

Which of the following is not an internal factor influencing the purchase price?

Which of the following is not an example of market circumstances?

Which of the following is not a factor influencing the fixing of the selling price?

Which of the following best explains cost-based pricing?

Which of the following best explains 'the supplier's specification'?

Which of the following best explains mark-up pricing?

Which of the following best explains market-based pricing?

Which of the following is not an external factor influencing the purchase price?

Which of the following best explains 'the customer's specification'?

Which of the following is not a factor influencing the fixing of the selling price?

Which of the following is not an external factor influencing the purchase price?

Which of the following best explains internal factors?

Which of the following is not an internal factor influencing the purchase price?

Which of the following is not an external factor influencing the purchase price?