Using the High-Low Method and the Information Below, Compute the Monthly

question 74

Multiple Choice

Using the high-low method and the information below, compute the monthly total fixed costs for SKP Corporation. $\begin{array}{lcc}\text { Month } & \text { Telephone Hours Used } & \text { Telephone Expenses } \\\text { April } & 100 & \$ 4,500 \\\text { May } & 110 & 4,800 \\\text { June } & 150 & 5,400\end{array}$

• A) $1,800
• B) $2,700
• C) $3,640
• D) $4,500

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Definitions:

Pricing Approach

A pricing approach refers to the strategy a business employs to set the prices for its products or services, considering factors like cost, demand, and competition.

Skimming Pricing

A pricing strategy involving setting high initial prices for a new product to maximize revenue layer by layer from segments willing to pay the high price.

Penetration Pricing

A pricing strategy where the price of a new product is set lower than the competitors’ prices to gain market share quickly.

Pricing Strategy

The approach businesses use to set the prices of their products or services, which can influence demand, profitability, and market positioning.