A Company That Views Pricing as a Static Element in a Business

question 41

Multiple Choice

A company that views pricing as a static element in a business decision:

• A) places a high priority on foreign business.
• B) sets prices to achieve specific objectives such as targeted return on profit.
• C) customizes its products for the foreign market.
• D) views domestic sales as an insignificant source of revenue.
• E) exports only excess inventory.

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Definitions:

Pre-tax Net Income

The amount of income earned by a company before taxes are deducted, representing its profitability.

Incremental Cash Flows

Additional cash flows from a new project or investment, considered when evaluating the financial viability of that project.

Stand-alone Principle

An approach to evaluating investment decisions without considering any potential impacts from external projects or operations.

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not affect future investment decisions.