You Are the General Manager of the Machining Products Division

question 47

Multiple Choice

You are the general manager of the machining products division of a diversified manufacturing company in Des Moines, Iowa. You primarily produce machining products for sale to wholesalers around the world. However, you periodically get requests from other divisions in your company to purchase your products. You treat these purchase requests the same as a purchase request from a non-affiliated entity. You sell your machining products to other internal divisions at a price that is equivalent to a market-based cost.
This is an example of which of the following types of business pricing?

• A) Freight absorption pricing
• B) Uniform geographic pricing
• C) Transfer pricing
• D) Zone pricing
• E) Base-point pricing

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Definitions:

Price Drop

A decrease in the market price of a good or asset, usually driven by changes in demand, supply, or broader economic factors.

Consumer Price Index

An index measuring the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Basket

A term used in finance to refer to a collection of investments, commodities, or currencies held together.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.