The First Generation Apple IPod Was Introduced in 2001 and Sold

question 94

Multiple Choice

The first generation Apple iPod was introduced in 2001 and sold for $500. The following year a mini version was introduced for $250. Apple initially used a ________ strategy to price their digital music innovation.

• A) market-skimming
• B) target costing
• C) deceptive
• D) market-penetration
• E) predatory

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Definitions:

Net Realizable Value

The estimated selling price in the ordinary course of business, less any costs of completion, disposal, and transportation.

Cost of Goods Sold

The immediate expenses related to manufacturing the products a company sells, which consist of materials and labor.

Inventory

The tangible property held for sale in the normal course of business, or to be used in producing goods or services.

Lower of Cost

An accounting principle that adjusts the value of an inventory or asset to the lower of its historical cost or its market value.