A Leading Hard-Disk Manufacturer Introduces a New Line of High-Capacity

question 26

Multiple Choice

A leading hard-disk manufacturer introduces a new line of high-capacity disk drivers. After selling to elite customers at a high price point, the company slowly reduces its prices over a period of time. The company is engaging in

• A) single pricing.
• B) introductory price dealing.
• C) price skimming.
• D) penetration pricing.
• E) predatory pricing.

Learn to calculate and interpret the degree of operating leverage.

Apply concepts of break-even and profitability analysis to decision-making, including special orders.

Understand the impact of variable and fixed costs on company profits and break-even point.

Learn to analyze the effects of cost structure on business risk and income variability.

---

Definitions:

Retrospective Adjustment

Adjusting the financial statements of past periods to reflect the application of new accounting policies as if they had been applied all along.

Accounting Principle

Fundamental guidelines or rules that form the basis for financial accounting and reporting practices, aimed at ensuring consistency and comparability.

Comparative Financial Statements

Financial reports that show the financial position, performance, and cash flows of a company across different periods side by side for comparison.

Accounting Changes

Alterations or updates made to accounting methods, estimates, or reporting entity, which can impact the financial statements of a business.