Question

24.      What is term used to describe the pricing practice in effect when a business deliberately prices below its costs in an effort to drive out competitors?

a.	competitive pricing.
b.	cost-based pricing.
c.	target pricing.
d.	predatory pricing.

25.      Which statement is trueconcerning target pricing?

a.	Target pricing is based on customers' perceived value for the product.
b.	Target pricing is illegal under Federal law.
c.	Target pricing is anti-competitive.
d.	Target pricing is the same as predatory pricing.

26.      Which of the following terms describes the systematic evaluation of all aspects of research and development, design of products and processes, production, marketing, distribution, and customer service?

a.	quality engineering.
b.	incremental engineering.
c.	systems engineering.
d.	value engineering.

        

27.      Which of the following statements is truewhen there is only one scarce resource?

a.	Choose the product that gives the largest contribution per unit of the scarce resource used.
b.	Choose the product that gives the smallest contribution per unit of the scarce resource used.
c.	Choose the product that gives the largest contribution per unit of all of the resources used.
d.	Choose the product that gives the smallest contribution per unit of all of the resources used.

28.      External financial reporting requires which costing method?

a.	standard costing.
b.	variable costing
c.	full-absorption costing.
d.	normal costing.

Answer 1

		Explanation
24	D. Predatory pricing	Predatory pricing is the pricing of goods or services at such a low level that other firms cannot compete and are forced to leave the market.
25	A. Target pricing is based on customers' perceived value for the product.	Target Pricing is a practice of deducting required margin from competitive market price, to find the pre-set cost
26	D. Value engineering	Value engineering the systematic evaluation of all aspects of research and development, design of products and processes, production, marketing, distribution, and customer service
27	A. Choose the product that gives the largest contribution per unit of the scarce resource used.	Since the product is scarce, the product with the maximum contribution margin per unit earns more profit
28	C. Full-absorption costing	GAAP requires external financial reporting to be done in absorption costing