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a.demand; revenueb.production and marketing; profitc.demand; target salesd.cost; production and marketing costse.cost; consumer demandAnswer:dPage(s):347LO: 1AACSB: AnalyticQD: MediumRationale:With cost-oriented approaches to pricing, a price setter stresses the cost side of the pricing problem, not the demand side. Price is set by looking at the production and marketing costs and then adding enough to cover direct expenses, overhead, and profit.14-124COST-ORIENTED APPROACHESCOMPREHENSIONWhich of the following statements regarding cost-oriented approaches is most accurate?a.These methods focus on the demand side of the pricing problem.b.These methods focus on production and marketing expenses.c.Target return on investment is an example of a cost-oriented method.d.Experience curve pricing is simple to use because costs predictably decrease by 25 percent with each doubling of production.e.Cost-oriented approaches are subcategories of competition-oriented methods.Answer:bPage(s):347LO: 1AACSB: AnalyticQD: Medium- 41 -
Rationale:With cost-oriented approaches, a price setter stresses the cost side of the pricing problem, not the demand side. Price is set by looking at production and marketing costs and then adding enough to cover direct expenses, overhead, and profit.14-125STANDARD MARKUP PRICINGCOMPREHENSIONStandard markup pricing is considered to be a __________ approach to pricing.a.demand-orientedb.profit-orientedc.cost-orientedd.competition-orientede.service-orientedAnswer:cPage(s):345, 347-348LO: 1AACSB: AnalyticQD: MediumRationale:Standard markup is a cost-oriented approach for selecting an approximate price level. See Figure 14-2 in the textbook.14-126STANDARD MARKUP PRICINGKNOWLEDGEStandard markup pricing refers toLO: 1AACSB: AnalyticQD: EasyRationale:Key term definition—standard markup pricing.14-127STANDARD MARKUP PRICINGKNOWLEDGE