To Maintain Profits While Offering the Best Industry Pricing to Customers

question 63

Multiple Choice

To maintain profits while offering the best industry pricing to customers, a furniture company decides to order materials in larger quantities to realize larger discounts on materials. The company is employing a ________ strategy.

• A)focused differentiation
• B)low-cost
• C)high-cost
• D)unifying
• E)hypercompetition

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Definitions:

Passive Activities

Economic activities in which the investor does not materially participate, and which often have different tax implications, such as rental property income.

Suspended Losses

Suspended Losses are losses from passive activities that exceed passive income, which cannot currently be deducted but can be carried forward to offset future passive income.

Net Passive Loss

The total loss from passive activities, exceeding the income from those activities, that cannot usually offset other types of income for tax purposes.

Not a Passive Activity

Activities that involve significant participation and management by the taxpayer, hence not qualifying for tax treatments as passive activities.