Skimming Pricing Refers to

question 210

Multiple Choice

Skimming pricing refers to

• A)setting the lowest initial price possible when introducing a new or innovative product in order to "skim" sales from competitors.
• B)setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product.
• C)setting a low initial price on a new product to appeal immediately to the mass market.
• D)the practice of replacing promotional allowances with higher manufacturer list prices.
• E)setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

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Definitions:

Conversion Costs

The total expense required to convert raw materials into finished goods, including labor and overhead costs.

Process Costing

An accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process, to calculate the total cost of manufacturing a product.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all goods available for sale during the period.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs incurred to convert raw materials into finished goods.