What is the disadvantage of average-cost pricing?
What is the disadvantage of average-cost pricing?
Homework Answers
- Average cost pricing is a type of pricing strategy which forces firms to price their products close to average costs.
- This helps in preventing a monopolist from charging a very high price for its product's.
- In this strategy a reasonable markup cost is added to the average cost of a product.
- Thought average cost pricing acts as an efficient strategy in pricing decision making, it also faces disadvantages.
- The main problem with this strategy is that, it fails to consider the cost variations or changes at different output levels.
- Unless there is a clear understanding of different levels of costs and how these costs change with different output levels, adopting average cost pricing strategy can lead to losses
- The firms can easily lose money with this strategy when the actual sales fall below the expected value.
What is the biggest disadvantage of $1 per $1,000 approach in product pricing? Group of answer...
What is the biggest disadvantage of $1 per $1,000 approach in product pricing? Group of answer choices This approach does not consider the changing effects of the economy, market, and competition. This approach does not examine the current trends of customer base in the markets. This approach restricts the availability of discounted rates and limits business that is unlikely to produce high profits. All of the above.
Q3. In a short essay, discuss the three basic pricing strategies: rigid cost-plus pricing, flexible cost-plus...
Q3. In a short essay, discuss the three basic pricing strategies: rigid cost-plus pricing, flexible cost-plus pricing, and incremental pricing. How do firms employ each strategy? What are any advantages or disadvantages to each strategy?
What is crossed-based pricing? How do companies use fixed and variable costs in cost-based pricing models?
What is crossed-based pricing? How do companies use fixed and variable costs in cost-based pricing models?
What is a major disadvantage of a proprietorship? A major disadvantage of a proprietorship is that...
What is a major disadvantage of a proprietorship? A major disadvantage of a proprietorship is that O A. the owner's entire wealth is at risk O B. the profits are taxed twice O C. the owner has limited liability OD. the firm has perpetual life Click to celert your newer and then click Check Answer
what are four common cost bases used in cost-plus pricing. How can they all result in...
what are four common cost bases used in cost-plus pricing. How can they all result in the same price?
Activity 13.1 - Price Calculation - Markup Pricing Cost per unit is $10. Use markup pricing...
Activity 13.1 - Price Calculation - Markup Pricing Cost per unit is $10. Use markup pricing to: 1. Set the price if you want a 50% markup: 2. Set the price if you want a 40% mark-up: Activity 13.2 - Price Calculation - Margin (Target Return Pricing) Variable Cost per unit = $10 Using target pricing analysis: 1. What is the target price for a 20 per cent return? 2. What is the target price for a 80 per cent...
Market skimming, market penetration, companion products (captive pricing), and cost-based pricing are some of the pricing...
Market skimming, market penetration, companion products (captive pricing), and cost-based pricing are some of the pricing strategies marketing managers use when marketing globally. Compare each of the pricing strategies listed above and how they apply. Explain Incoterms (International Commercial Terms). Why is it important to understand those internationally accepted terms of trade? Provide examples.
Pharoah Company began operations on January 1, 2015, and uses the average-cost method of pricing ...
Pharoah Company began operations on January 1, 2015, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2018. The following information is available for the years 2015–2017. Net Income Computed Using Average-Cost Method FIFO Method LIFO Method 2015 $15,990 $19,120 $12,040 2016 17,880 20,820 14,130 2017 20,090 24,750 16,970 (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2018. (Credit account...
1. The most popular method of pricing is _____ pricing. a. breakeven b. incremental-cost c. cost-plus...
1. The most popular method of pricing is _____ pricing. a. breakeven b. incremental-cost c. cost-plus d. full-cost 2. Prestige pricing objectives emphasize: a. cost minimization. b. quality and exclusivity. c. revenue maximization. d. sales maximization. 3. Global Diamond manufactures jewelry. This firm is planning to introduce a new necklace and is trying to determine how many units it must sell in order to break even. Fixed costs are $100,000 and variable costs for each unit will be $20. At...
Sage Company began operations on January 1, 2015, and uses the average-cost method of pricing inventory....
Sage Company began operations on January 1, 2015, and uses the
average-cost method of pricing inventory. Management is
contemplating a change in inventory methods for 2018. The following
information is available for the years 2015–2017.
Net Income Computed Using
Average-Cost Method
FIFO Method
LIFO Method
2015
$15,860
$18,810
$12,090
2016
18,010
20,800
14,140
2017
19,970
24,990
16,870
(a) Prepare the journal entry necessary to record
a change from the average cost method to the FIFO method in 2018.
(Credit account...
What is a major disadvantage of a proprietorship? A major disadvantage of a proprietorship is that O A. the owner's entire wealth is at risk O B. the profits are taxed twice O C. the owner has limited liability OD. the firm has perpetual life Click to celert your newer and then click Check Answer
Activity 13.1 - Price Calculation - Markup Pricing Cost per unit is $10. Use markup pricing to: 1. Set the price if you want a 50% markup: 2. Set the price if you want a 40% mark-up: Activity 13.2 - Price Calculation - Margin (Target Return Pricing) Variable Cost per unit = $10 Using target pricing analysis: 1. What is the target price for a 20 per cent return? 2. What is the target price for a 80 per cent...
Sage Company began operations on January 1, 2015, and uses the
average-cost method of pricing inventory. Management is
contemplating a change in inventory methods for 2018. The following
information is available for the years 2015–2017.
Net Income Computed Using
Average-Cost Method
FIFO Method
LIFO Method
2015
$15,860
$18,810
$12,090
2016
18,010
20,800
14,140
2017
19,970
24,990
16,870
(a) Prepare the journal entry necessary to record
a change from the average cost method to the FIFO method in 2018.
(Credit account...
Most questions answered within 3 hours.
-
Mojo Mining has a bond outstanding that sells for $2,165 and
matures in 17 years. The...
asked 9 seconds from now -
Olympic weightlifter Zoe Smith holds a 58 kg barbell over her
head, 2.1 meters above the...
asked 2 minutes ago -
For sample average = 28 and a μ = 17 and a s = 4 and...
asked 12 minutes ago -
A
short forward contract that was negotiated some time ago will
expire in three months and...
asked 20 minutes ago -
If R = R1L2/L3, what is the measurement error dR based on the
rules of error...
asked 32 minutes ago -
At equilibrium, the concentrations of N2(g),
O2 (g) and NO (g) in a sealed reaction vessel...
asked 32 minutes ago -
Find P(X-bar > 15.5)
n=81, Mean=15, SD=1
asked 1 hour ago -
3. What percentage of search engine users don’t go to the next
page of search results?...
asked 51 minutes ago -
Since Tanya Martin retired, she has used income from her
investment in the Alger Mid Cap...
asked 57 minutes ago -
Determine the point estimate of the population proportion, the
margin of error for the following confidence...
asked 1 hour ago -
How do you do this again? thanks in advance guys
Take as input 10 integers from...
asked 1 hour ago -
A single-turn circular loop of wire of radius 5.0 cm lies in a
plane perpendicular to...
asked 1 hour ago