Sales Are Down for Air Toronto Enterprise and the CEO

question 90

Multiple Choice

Sales are down for Air Toronto Enterprise and the CEO is reflecting on times when her company was profitable and had a sustainable competitive advantage.What aspects is the CEO looking at to help her move the company back to being profitable?

• A)mission critical systems
• B)critical success factors
• C)performance objectives
• D)financial reports

Understand the basic principles of pricing models and strategies.

Analyze the impact of total revenue, total cost, marginal revenue, and marginal cost on pricing decisions.

Calculate mark-up percentages in different pricing scenarios.

Identify the relationship between price, demand, and sales quantity.

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Definitions:

Target Costing

A pricing approach where a company determines the potential selling price of a product and then subtracts desired profit to arrive at a target cost, subsequently focusing on reducing manufacturing costs to meet this target.

Return on Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit gained from an investment by the cost of the investment.

Selling Price

The amount a customer pays to purchase a product or service, determined by various factors including cost, competition, and demand.

Target Costing

A pricing method that starts with a market-based price point and then deduces the allowable cost to maintain profitability.