When Superior Cellular Released Its First Smartphone, It Charged Customers

question 39

Multiple Choice

When Superior Cellular released its first smartphone, it charged customers $999. Shortly thereafter, it reduced the price to $599 for the exact same device. Superior's decision to set a relatively high price for a period of time after the product launched and then decrease the price to a level that would be more sustainable over time reflects which pricing strategy?

• A)target pricing
• B)survival pricing
• C)profit maximization
• D)volume maximization
• E)underpricing

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Definitions:

Labor Quantity Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate.

Controllable Overhead Variance

Controllable overhead variance is the difference between the actual overhead costs incurred and the budgeted overhead costs that could be controlled.

Overhead Applied

The portion of overhead costs allocated to specific jobs or production activities based on a predetermined formula or rate.

Overhead Volume Variance

The difference between the budgeted and actual overhead costs due to changes in the level of production or activity.