A Pricing Strategy of Setting the Initial Price Low for the Introduction

question 43

Multiple Choice

A pricing strategy of setting the initial price low for the introduction of a new product or service, with the objective of building sales, market share, and profits quickly is called:

• A)market development pricing.
• B)market extension pricing.
• C)market establishment pricing.
• D)market testing pricing.
• E)market penetration pricing.

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Definitions:

Direct Labor-hours

Sum total of hours expended by workers directly active in the manufacturing domain.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on standard cost.

Variable Manufacturing Overhead

Costs in the manufacturing process that change with the level of production output, such as utilities and materials used in production.

Last Month

Refers to the period of time from the first to the last day of the month immediately preceding the current month.