Suppose That the Watchband Department of Timex Sells Completed Watchbands

question 6

Multiple Choice

Suppose that the watchband department of Timex sells completed watchbands to the finished watch department. The finished watch department is charged the price it would have to pay an outside watchband manufacturer less a discount to reflect low sales and transportation costs. This method of pricing is called ____ pricing.

• A) zone
• B) actual full cost
• C) standard full cost
• D) cost plus investment
• E) market-based cost

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Definitions:

Adverse Selection

A situation in insurance and finance where those with higher risks are more likely to seek insurance or loans, leading to an imbalanced pool that can raise costs for insurers or lenders.

High-Quality Used Car

A pre-owned vehicle that has been maintained well and often includes features of newer models, indicating low mileage and minimal wear.

Warranty

A guarantee provided by a seller or manufacturer concerning the condition of a product and the promise of repair or replacement within a specified period.

Deductible

The amount an insured individual must pay out of pocket before an insurance company pays a claim.