Marketing Final Exam

As large as possible relative to total costs pts 1

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Unformatted text preview: c. demand-oriented d. sales maximization e. status quo pricing ANS: B Profit maximization means setting prices so that total revenue is as large as possible relative to total costs. PTS: 1 REF: 302 Thinking KEY: CB&E Model Pricing OBJ: 19-2 TOP: AACSB Reflective MSC: BLOOMS Application 13. When Insight Research Associates quotes a marketing research project, management will first estimate the cost to conduct the research and produce and deliver the final client report. The next step in determining the price is to add 30 percent to that cost estimate. This becomes the price estimate given to the potential research client. This suggests that Insight Research Associates uses a(n) _____ pricing objective. a. profit-oriented b. market share maximization c. status quo d. sales maximization e. supply–demand equalization ANS: A Target return on investment is one of the most common types of profit-oriented pricing objectives. PTS: 1 REF: 303 Thinking KEY: CB&E Model Pricing OBJ: 19-2 TOP: AACSB Reflective MSC: BLOOMS Application 14. Thompson Pool and Patio is known for quality pool installations, excellent customer service, and reasonable prices. If you want to have a Thompson pool, you will have to wait about six months due to demand for their product. While Thompson could probably price its product higher, given the demand, they don’t. Instead, the company sets its price so that it will earn a reasonable level of profits. Thompson seems to base its pricing policy on: a. profit maximization b. earning satisfactory profits c. creating retained earnings d. making the most money as possible e. decreasing consumer demand ANS: B The objective of satisfactory profits is characterized by seeking a level of profits that is satisfactory to management and owner(s). PTS: 1 REF: 303 Thinking KEY: CB&E Model Pricing OBJ: 19-2 TOP: AACSB Reflective MSC: BLOOMS Application 15. _____ is equal to net profit after taxes divided by total assets. a. Return on investment b. Economic order quantity c. Target-on-sales d. Retained earnings e. Efficiency maximization ANS: A This is the definition of return on investment (ROI). PTS: 1 REF: 303 Thinking KEY: CB&E Model Pricing OBJ: 19-2 TOP: AACSB Reflective MSC: BLOOMS Knowledge 16. Pierre’s Ice Cream Company produces ultra-rich ice cream, which it sells in the Cleveland, Ohio, area. Last year, it managed to exceed its target return on investment (ROI) for the current fiscal year. The following results were found on its financial statements: Gross revenues: $250,000 Gross profits: $100,000 Net profits after tax: $ 50,000 What was the actual ROI for Parrish Farms? a. b. c. d. e. Total assets: Total liabilities: Owner’s equity: $500,000 $200,000 $300,000 6.67 percent 10 percent 22 percent 28 percent 100 percent ANS: B ROI is net profits after taxes divided by total assets: $50,000 ÷ 500,000 = 10 percent. PTS: 1 REF: 303 KEY: CB&E Model Pricing OBJ: 19-2 TOP: AACSB Analytic MSC: BLOOMS Analysis 17. Sherrie...
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