To Reduce the Price Sensitivity for Some of Its Products

question 20

Multiple Choice

To reduce the price sensitivity for some of its products, Washburn Guitars

• A) uses multiple suppliers for its raw materials.
• B) offers three months of free music lessons with the purchase of each guitar.
• C) uses endorsements by internationally known musicians who play Washburn signature guitars.
• D) offers a lifetime, unconditional warranty on all its instruments regardless of the price of its guitars.
• E) sponsors free music programs and special Washburn guitar camps for children.

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Definitions:

Customizing

The process of modifying products or services to meet specific customer demands or preferences.

Manufacturing Cost

The total expense incurred in the production of goods, including raw materials, labor, and overhead.

Predetermined Overhead Rates

Estimated overhead rates used to assign manufacturing overhead costs to products based on a pre-defined basis such as machine hours or labor hours.

Machine-Hours

A measure of the amount of time a machine is operated, used as a basis for allocating overhead costs in manufacturing.