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:

Certified Check

A type of check for which the issuing bank guarantees the availability of funds by verifying the drawer's signature and setting aside the check amount from the drawer's account.

Statement of Income and Expense

A financial document that summarizes revenue and expenses over a specific period, showing net profit or loss.

Profitability

The financial metric that measures the degree to which a business or activity yields profit or financial gain.

Quarterly Return

The Employer’s Quarterly Federal Tax Return, a form submitted to the IRS every 3 months that summarizes the federal income and employment taxes withheld from employees’ paychecks.