Canada Post Argues That Its Express Service Is Comparable to That

question 158

Multiple Choice

Canada Post argues that its express service is comparable to that offered by FedEx and that its prices are much lower.Yet FedEx dominates with more than a 45 percent share of the express-delivery market.Which of the following statements most accurately describes this situation?

• A) Customer value is not an issue in deciding which express-delivery service to use.
• B) FedEx is perceived as offering greater customer value.
• C) Canada Post is perceived as offering greater customer value.
• D) Canada Post should lower its prices even further to increase market share.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products based on a certain activity base.

Plantwide Predetermined

A rate calculated by dividing the estimated manufacturing overhead cost by the estimated amount of a cost driver, applied uniformly across a manufacturing plant.

Manufacturing Overhead Rate

A calculation used in costing that allocates indirect manufacturing costs to products based on a predetermined factor, such as machine hours or labor costs.

Machine-Hours

A measure of production time that quantifies the number of hours a machine is in operation, used for allocating manufacturing costs related to machinery use.