Which of the Following Pricing Strategies Best Describes Price Lining

question 127

Multiple Choice

Which of the following pricing strategies best describes price lining?

• A) setting an initial low price to establish a new product in the market
• B) setting an initial high price to cover new product costs and generate a profit
• C) setting individually negotiated prices for certain categories of products
• D) setting a limited number of prices for certain categories of products
• E) setting individually negotiated prices for all categories of products

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Definitions:

Controllable Fixed Costs

Fixed costs that management has the ability to influence or change in the short term, such as advertising expenses.

Controllable Margin

The portion of profit or contribution margin that a manager has direct control over, before fixed costs and overhead are deducted.

Responsibility Report

A management tool that collects and reports planned and actual financial information by responsibility centers.

Direct Labor

Workers or employees who are directly involved in the manufacturing of products or delivery of services.