Jamesway Corporation Has Two Separate Divisions That Operate as Profit

question 25

Multiple Choice

Jamesway Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year: The White Division occupies 20,000 square feet in the plant. The Grey Division occupies 30,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $50,000. Compute gross profit for the White and Grey Divisions, respectively.

• A) $72,000; $193,000.
• B) $172,000; $352,000.
• C) $100,000; $241,000.
• D) $52,000; $163,000.
• E) $72,000; $163,000.

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Definitions:

Yield Management Pricing

A pricing strategy that involves adjusting prices based on expected demand levels, commonly used in the airline and hotel industries.

Skimming Pricing

A pricing strategy where a firm charges the highest initial price that customers will pay and lowers it over time as the demand at the higher price decreases.

Target Return

A pricing strategy where the price is set based on a targeted return on investment for a product or project.

Bundle Pricing

A pricing strategy where multiple products or services are sold together at a single price, often at a discount compared to purchasing each item separately.