Refer to the Scenario Below to Answer the Following Questions

question 103

Multiple Choice

Refer to the scenario below to answer the following questions.
Pensonic Manufacturing produces small kitchen appliances-blenders, hand mixers, and electric skillets. Pensonic attempts to target newlyweds and first-time home buyers with this brand, under a market share leadership strategy.
In considering that most young households have limited financial resources, Pensonic has attempted to engage in target costing. "In doing this," Pensonic's manager Abdul Razak stated, "we have better control over keeping price right in line with customers."
Pensonic manufactures a three-speed blender, its top seller, and a five-speed blender. The hand mixers are manufactured in two styles-a small hand-held mixer with two rotating beaters and a similar style that comes with an optional stand and attached mixing bowl. Alden's temperature-controlled skillets are manufactured in one style with three color options.
"Our product offerings are narrower," Abdul Razak added, "but our line workers know each product like the back of their hands. This allows us to produce superior products while holding our prices low."
-Abdul Razak says that his line workers "know each product like the back of their hands," and that this knowledge helps the company keep its prices low.This indicates that Pensonic Manufacturing most likely uses which of the following strategies?

• A) cost-plus pricing
• B) value-added pricing
• C) the experience curve
• D) cost-based pricing
• E) target profit pricing

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Definitions:

Mutually Exclusive

Events or choices that cannot occur or be chosen at the same time.

Internal Rate of Return

A metric used in capital budgeting to estimate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows from a particular project zero.

Cost of Capital

The rate of return a business needs to generate in order to meet the demands of its creditors and investors, used in evaluating new projects.

Cash Inflows

Money or other forms of financial assets that come into a company, typically as a result of its business operations or investments.