If a Firm's Profit Is High Enough for It to Remain

question 212

Multiple Choice

If a firm's profit is high enough for it to remain in business, a pricing objective may be to ________, which will in turn may lead to increases in market share and profit.

• A) increase the commitment to social responsibility
• B) increase dollar sales revenue
• C) decrease unit volume while maintaining price
• D) increase research and development funding for new product line extensions
• E) continue with previous policies that seem to be working

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Definitions:

Fixed Budget

A budget that sets forth expected revenue, expenses, and profit for a company over a specific period, based on the assumption of a fixed level of activity.

Flexible Budget

A financial plan that shifts in response to alterations in activity or volume.

Overhead Costs

Expenses not directly attributable to the production of goods or services, such as rent, utilities, and administration.

Flexible Budgets

A budget that adjusts or flexes with changes in volume or activity, allowing for a more accurate comparison of actual spending with budgeted amounts for different levels of activity.