A Temporary Reduction in Price, Which May Involve Pricing at Below

question 125

Multiple Choice

A temporary reduction in price, which may involve pricing at below cost, and which is designed to increase patronage is known as a(n) :

• A) rebate.
• B) allowance.
• C) loss leader.
• D) discount.
• E) special price.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent or salaries.

Contribution Margin

This is the amount remaining from sales revenue after all variable expenses have been deducted.

Financial Reporting

The process of providing financial information to company stakeholders to help in making business decisions.

Units

A measure of quantity, such as items or products, used in business operations and accounting.