Excelsior Corp

question 56

Multiple Choice

Excelsior Corp.launches a new hand-held personal digital assistant (PDA) for busy corporate executives.The initial retail price is set at $699.One year later, in an effort to reach a broader market, the price is lowered to $299.Which of the following describes the pricing strategies used by Excelsior Corp?

• A)skimming strategy followed by penetration strategy
• B)penetration strategy followed by cost-based strategy
• C)penetration strategy followed by skimming strategy
• D)penetration strategy only
• E)skimming strategy only

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Definitions:

LIFO

An accounting method for valuing inventory that assumes the most recently acquired items are sold first, with costs of older inventory used for valuation.

Ending Inventory Balance

The value of unsold goods that a company holds at the end of an accounting period.

Cost Of Goods Sold

The total direct expenses related to producing goods sold by a business.

Net Income

The profit a company has after deducting all its expenses from its total revenue.