From an Operational Perspective, Yield Management Is Most Effective Under

question 56

Multiple Choice

From an operational perspective, yield management is most effective under which of the following circumstances?

• A) Demand cannot be segmented by customer.
• B) Inventory is perishable.
• C) Fixed costs are low, and variable costs are high.
• D) The customer is a "captive" of the system.
• E) The firm doing yield management is very profitable.

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Definitions:

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.

Variable Costing

A costing approach where only the variable costs involved in production—such as raw materials, direct labor, and variable manufacturing expenses—are included in the cost of goods sold, leaving out fixed manufacturing overheads.

Contribution Margin

The amount by which the sales of a product exceed its variable costs, representing the portion of sales revenue that contributes to covering fixed costs and generating profit.

Unit Product Cost

The total cost (direct materials, direct labor, and overhead) to produce one unit of a product.