Scenario 12.3 Use the Following to Answer the Questions

question 216

Multiple Choice

Scenario 12.3
Use the following to answer the questions.
Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations only if the animal is ill. Glenwood's objective is to generate more income per customer on an annual basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for each vaccine, and a fee for each type of examination beyond the basic office visit. Most customers pay the flat office fee and a fee for a rabies vaccine. Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine, and additional vaccines that prevent heartworm, kennel-cough, and fleas. Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program, rather than a one-time annual visit.
-Refer to Scenario 12.3. Glenwood has decided that it is going to offer a special package if the prevention plan is purchased within the first 30 days of each year's time for vaccinations. This type of pricing strategy would be an example of:

• A) customary pricing.
• B) secondary-market pricing.
• C) introductory pricing.
• D) periodic discounting.
• E) random discounting.

---

Definitions:

Sales Discount

A reduction in the price of goods or services offered to customers, typically to prompt early payment or bulk purchases.

Contra Revenue Account

An account used to record reductions in gross revenue, such as discounts, returns, and allowances.

Operating Expense

Refers to the costs associated with the day-to-day functions of a business, excluding costs related to production.

Credit Terms

Conditions under which a seller will extend credit to a buyer, including repayment periods and interest rates.