A Producer in Philadelphia Uses "Zone Pricing

question 248

Multiple Choice

A producer in Philadelphia uses "zone pricing." It's selling widgets for $150/ton in the Eastern Zone-which includes Richmond and Baltimore. The actual freight cost from its plant to Baltimore is $70/ton and from its plant to Richmond is $80/ton. In this situation:

• A) one ton of widgets costs a Baltimore buyer the same as a Richmond buyer.
• B) both buyers would pay $300 for one ton of widgets.
• C) one ton of widgets delivered to Richmond would cost the buyer $230.
• D) one ton of widgets delivered to Baltimore would cost the buyer $220.
• E) None of these alternatives is correct.

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Definitions:

Long-Term Debt

Long-term debt refers to loans and financial obligations lasting more than one year, often used for significant investments or expenses by a company.

Equity

The value of an ownership interest in a firm, including stocks and retained earnings, representing the residual assets after deducting liabilities.

Investing Activities

Financial transactions and events related to acquiring or disposing of assets, such as the purchase or sale of equipment or securities, reflected in the cash flow statement.

Statement

A written or digital document that records the details of a particular financial or operational activity within a specific period.