Question 1

Heather runs Cute Cakes,a gourmet cupcake bakery.In order to set prices for her cupcakes,Heather looks at the costs of making each cupcake and then adds an additional amount on top of that to arrive at her price.Heather is demonstrating ____________.

Accepted Answer

Heather is using cost plus pricing, where she adds a markup to the cost of production to arrive at the final price of her cupcakes.

Question 2

_____________ are incurred over time,regardless of volume.

Accepted Answer

Fixed costs are expenses that are incurred over time and do not vary with the volume of production or sales. Examples include rent, insurance, and salaries of permanent employees.

Question 3

______________ are direct,immediate reductions in price provided to purchasers.

Accepted Answer

Discounts are direct, immediate reductions in price provided to purchasers. Fixed costs refer to expenses that do not vary with changes in the level of production or sales, variable costs are expenses that vary with changes in the level of production or sales, and total costs are the sum of fixed and variable costs. Allowances refer to reductions in price provided after the sale, typically for defective or damaged goods.

Question 4

To accommodate lengthy sales processes,firms offer _____________,which reward the purchaser for shifting part of the inventory storage function away from the manufacturer.

Accepted Answer

To accommodate lengthy sales processes, firms offer seasonal discounts, which reward the purchaser for shifting part of the inventory storage function away from the manufacturer. Seasonal discounts are often expressed as greatly extended invoice due dates.

Question 5

As with average-cost pricing,the effectiveness of __________________ is highly dependent on the accuracy of the forecast.

Accepted Answer

Target return pricing is highly dependent on the accuracy of the forecast because it uses forecasted data to determine the price that will achieve a desired return on investment.

Question 6

Giovanni's Gems is a high quality Italian leather goods store in Manhattan.Giovanni runs an Internet site where people can buy his products and he will charge the same delivery fee to any location within the 48 contiguous states.Giovanni utilizes _____________.

Accepted Answer

Giovanni is charging the same delivery fee to any location within the 48 contiguous states, which indicates that he is using Uniform delivered pricing.

Question 7

From a legal standpoint,it is essential that ________________ are offered to all customers on an equally proportionate basis so that small buyers as well as large buyers follow the same rules for qualification.

Accepted Answer

The answer of From a legal standpoint,it is essential that...

Question 8

To use target return pricing,the first step for one is to calculate ______________.

Accepted Answer

The answer of To use target return pricing,the first step...

Question 9

The Internet helped to create a market for ____________________ where sellers bid prices to capture a buyer's interest.

Accepted Answer

The answer of The Internet helped to create a market...

Question 10

Solid Surface,a countertop store,will give customers a 10% discount if they pay their bills in full in 20 days,however after 20 days they do not receive a discount.This is an example of ______________.

Accepted Answer

The discount being offered is based on paying the bill in full within a specific time frame (20 days), which is a characteristic of cash discounts. Trade discounts are typically given to customers who purchase in large quantities or are part of a specific trade, quantity discounts are given based on the volume of the purchase, seasonal discounts are offered during specific times of the year, and promotional allowances are incentives given to customers for certain promotional activities such as advertising.

Question 11

James is trying to determine the best price for his new fishing poles.He decided to divide all of his costs by the number of fishing poles he will be manufacturing,to come up with a price.James is using ________________.

Accepted Answer

James is using average-cost pricing, which involves dividing all of his costs by the number of fishing poles he will manufacture to determine the price per unit.

Question 12

_____________ remit monies to purchasers after the fact.

Accepted Answer

The term "allowances" refers to money that a company refunds to customers after the sale is made. This could be in the form of a price adjustment if the customer finds the same product at a lower price elsewhere, or due to a defect or quality issue with the purchased item. Therefore, option E is the best choice as it directly refers to companies remitting monies to purchasers after the fact.

Question 13

Veggie Vitality will send retailers a check if they promote their vegetable-based smoothies in the retailer's promotional efforts.Veggie Vitality uses _____________.

Accepted Answer

Veggie Vitality is offering a promotional allowance to retailers, which involves providing them with money or other incentives to promote the sale of their products. This is different from cash, trade, quantity, or seasonal discounts, which involve reducing the price of the product itself.

Question 14

To better take into account the differential impact of fixed and variable costs,marketing managers can use ________________.

Accepted Answer

Target return pricing allows managers to take into account both fixed and variable costs by setting a price that will generate a desired level of profit based on the firm's cost structure. This allows for a more accurate pricing strategy than options such as cost plus pricing, markup on sales price, and average-cost pricing, which do not take into account the impact of fixed costs on pricing decisions. Price wars are a strategy used by firms to drive competitors out of the market, and are not a tool for managers to consider cost structure.

Question 15

__________________ means that title transfer and freight paid on the goods being shipped are based on the free on board location.

Accepted Answer

FOB (Free on Board) pricing means that title transfer and freight paid on the goods being shipped are based on the location where the goods are loaded onto the transportation vehicle. This method is commonly used in international trade and helps eliminate confusion over who is responsible for the goods during transit.

Question 16

_______________ are typically expressed as greatly extended invoice due dates.

Accepted Answer

The answer of _______________ are typically expressed as greatly extended...

Question 17

________________ uses the sales price as a basis of calculating the markup percentage.

Accepted Answer

Markup on sales price, also known as percentage markup on selling price, determines the percentage of profit a company makes on each sale. This method calculates the markup percentage based on the selling price, rather than the cost of the product or service.

Question 18

_____________ fluctuate with volume.

Accepted Answer

Variable costs fluctuate with the volume of production or sales. Fixed costs, on the other hand, remain constant regardless of the level of production or sales. Total costs are the sum of fixed and variable costs. Therefore, option B is the correct choice.

Question 19

Caution is warranted in employing ________________,as it is always possible that the quantity demanded will not match the marketing manager's forecast.

Accepted Answer

Caution is warranted in employing average-cost pricing, as it is always possible that the quantity demanded will not match the marketing manager's forecast.

Question 20

The Internet created a rise in ___________________ as more and more people decided to meet online in order to sell products to the highest bidder.

Accepted Answer

The rise in meeting online to sell products to the highest bidder is known as auction pricing, which involves the use of online auctions to determine the value of a product or service. This is facilitated by the Internet, which enables individuals from different locations to participate in the bidding process.

Quiz 10: Managing Pricing Decisions