Auto Tires Has Been in the Tire Business for Four

question 32

Essay

Auto Tires has been in the tire business for four years. It rents a building but owns all of its equipment. All employees are paid a fixed salary except for the busy season (April-June), when temporary help is hired by the hour. Utilities and other operating charges remain fairly constant during each month except those in the busy season.
Selling prices per tire average $75 except during the busy season. Because a large number of customers buy tires prior to winter, discounts run above average during the busy season. A 15% discount is given when two tires are purchased at one time. During the busy months, selling prices per tire average $60.
The president of Auto Tires is somewhat displeased with the company's management accounting system because the cost behavior patterns displayed by the monthly breakeven charts are inconsistent; the busy months' charts are different from the other months of the year. The president is never sure if the company has a satisfactory margin of safety or if it is just above the breakeven point.
Required:
a.Why might it be difficult to use CVP in this situation?
b.How can the information be presented in a better format for the president?

Identify examples of reinforcement, punishment, and their effects on behavior.

Distinguish between different types of reinforcements (positive, negative) and their applications.

Comprehend the concept of shaping through successive approximations.

Recognize the application of conditioning principles in modifying behaviors.

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Definitions:

Determinant Attributes

Specific characteristics or features of a product or service that influence the consumer's purchasing decision.

Evaluative Criteria

Consist of a set of salient, or important, attributes about a particular product.

Evoked Sets

Refer to a group of brands or products a consumer considers during the decision-making process before making a purchase.

Evoked Set

A group of relevant brands or products that a consumer remembers when making a purchase decision.