Scenario 12.3 Use the Following to Answer the Questions

question 75

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's closest competitor, The Hearthstone Pet Hospital, currently charges $60 for each basic office visit. If Glenwood were to price its basic office visit at $45, it would most likely be employing:

• A) customary pricing.
• B) penetration pricing.
• C) prestige pricing.
• D) price skimming.
• E) cost-based pricing.

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Definitions:

Financial Statement Item

An individual line item or component that appears in a financial statement such as the balance sheet or income statement.

Common-size Statements

Financial statements that display line items as a percentage of a common base figure, facilitating comparisons across time periods or companies.

Comparative Financial Statement

Comparative financial statements present the financial position and results of operations for a business across multiple periods, allowing for analysis of trends and financial performance over time.

Base Period

A specific time period against which conditions in other time periods are compared, often used in index numbers or to measure economic growth.