A Smartphone Manufacturer Introduced a New Device into the Marketplace

question 91

Multiple Choice

A smartphone manufacturer introduced a new device into the marketplace with pricing set according to the skimming approach.The CEO of the company reviews financial reports from the device and notes that the pricing approach used is not cost-effective for the company.How should the CEO adjust the pricing strategy for this device? ​

• A)​drop the price
• B)​increase the price
• C)​offer an everyday low price option
• D)​remarket the device under a private label
• E)​match the price to the competitions' price

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Definitions:

Assembly Department

a division within a manufacturing plant where components are put together to create a final product.

Direct Labor Hour

The amount of time employees directly involved in manufacturing spend on producing a specific unit of output.

Factory Overhead Rates

Calculated rates used to allocate a factory's indirect costs to products being produced, aiding in determining total production costs.

Plantwide Rate

A single, uniform overhead absorption rate used throughout an entire factory or plant, applied to all units irrespective of the department in which the costs were incurred.