Which of the Following Is a Disadvantage of Flexible Pricing

question 137

Multiple Choice

Which of the following is a disadvantage of flexible pricing?

• A)It allows a salesperson to adjust the price in response to competition.
• B)It leaves opportunities for sales by not adjusting to customers.
• C)It allows a salesperson to adjust the price depending on his or her customer.
• D)It can cause discontent among customers who realize they have paid a higher price than others.
• E)It results in broadcasting a price that the competition can undercut.

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Definitions:

Fixed Overhead

Costs associated with running a business that do not change with the level of production or sales, such as rent, salaries, and insurance.

Variable Overhead Rate

Variable Overhead Rate is the portion of indirect manufacturing costs that varies in proportion to production volume or activity levels, such as utilities or raw materials.

Actual Production

The real quantity of goods or services produced during a specific period, as opposed to planned or projected quantities.

Fixed Factory Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs attributed to a variation in produced or achieved volumes of goods.