For a Market Penetration-Price Strategy to Succeed, Which of the Following

question 138

Multiple Choice

For a market penetration-price strategy to succeed, which of the following is LEAST likely to be true?

• A) Production costs decrease as sales volume increases.
• B) A low price triggers market growth.
• C) Distribution costs decrease as sales volume increases.
• D) Low prices must inhibit competition from entering the market.
• E) The strategy can be changed quickly, to a higher-priced position, with no negative impact.

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Definitions:

Labor Efficiency Variance

The variance between the real hours spent working and the anticipated standard hours, times the normal wage rate.

Standard Hours

The predetermined amount of time expected to complete a task or produce a unit of product under normal conditions.

Actual Output

The real quantity of goods or services produced by a company during a specific period.

Labor Efficiency Variance

A measure in managerial accounting that compares the actual hours worked to the standard hours planned for a process, indicating efficiency in labor usage.