In Developing a Master Budget for a Manufacturing Company, Which

question 105

Multiple Choice

In developing a master budget for a manufacturing company, which one of the following items should be done first?

• A) Development of a sales budget.
• B) Development of the capital budget.
• C) Determination of manufacturing capacity.
• D) Determination of the advertising budget.

---

Definitions:

Price Lining

Setting the price of a line of products at a number of different specific pricing points.

Target Pricing

Consists of (1) estimating the price that ultimate consumers would be willing to pay for a product, (2) working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers, and then (3) deliberately adjusting the composition and features of the product to achieve the target price to consumers.

Cost-oriented

A pricing strategy where the price of a product or service is determined based on its production cost plus a markup.

Price Lining

A pricing strategy where a retailer offers a product line at several price points, catering to different customer segments and preferences.