Dell Prices New Computer Models to Minimize the Disruption of Demand

question 7

Multiple Choice

Dell prices new computer models to minimize the disruption of demand for its existing products.This implies a strategy of ________.

• A) Lowering the prices of existing models to maintain separation of price between new and existing models
• B) Lowering prices of all models to accommodate for increases in technology
• C) Raising all prices together in order to confuse the public to thinking all the technology is at the same level
• D) Raising and lowering prices of all models in order to create a mixed effect
• E) Pricing based solely on costs

Distinguish between situations that require the computation of net present value vs. other financial metrics.

Evaluate the effects of additional business activities on overall profitability through incremental analysis.

Understand the structuring of messages in business communication.

Comprehend the strategies to emphasize or de-emphasize information in business memos.

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Definitions:

Intercompany Profits

Profits derived from transactions between companies within the same group, which may need to be eliminated in consolidated financial statements.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its identifiable net assets; reflects the value of the brand, customer relationships, and reputation.

Parent-Company Extension Method

This method involves the accounting for investments in subsidiaries from the perspective of the parent company, focusing on the extension of the parent company's financial statements to include its interest in subsidiaries.

Entity Method

An approach in accounting that records the investments of a parent company in a subsidiary as distinct separate entities.