Pricing the Basic Product in a Product Line Low While

question 137

Multiple Choice

Pricing the basic product in a product line low while pricing related items at a higher level is called

• A) premium pricing.
• B) bait pricing.
• C) captive pricing.
• D) price skimming.
• E) price lining.

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Definitions:

Accounts Receivable Turnover

This metric calculates how many times a business can turn its accounts receivable into cash during a certain period, indicating the efficiency of credit and collection policies.

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers for goods or services sold on credit.

Allowance for Doubtful Accounts

An estimation of accounts receivable that a company does not expect to collect, appearing as a contra-asset account on the balance sheet.

Net Credit Sales

The net income generated from credit sales after subtracting any returns or allowances.