Wrigley Recently Introduced a New Flavor of Orbit Brand Sugar-Free

question 282

Multiple Choice

Wrigley recently introduced a new flavor of Orbit brand sugar-free chewing gum-mint mojito. The introductory price was low so that it quickly created loyal customers for the flavor. In this example, Wrigley used

• A)skimming pricing.
• B)penetration pricing.
• C)price lining.
• D)odd-even pricing.
• E)loss-leader pricing.

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Definitions:

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard hourly wage rate.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost allocated for the actual production achieved.

Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or budgeted) cost, based on standard rates and actual hours worked.