A Short-Term Tactic in Which a Company Sets a High

question 59

Multiple Choice

A short-term tactic in which a company sets a high initial price for a product to recoup its investment is referred to as

• A) cost-plus pricing.
• B) value-based pricing.
• C) price skimming.
• D) target costing.
• E) price penetration.

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Definitions:

Net Income

The total earnings of a company after deducting all expenses and taxes from total revenue.

Drawings

Amounts withdrawn by the owner(s) of a business for personal use.

FASB

The Financial Accounting Standards Board (FASB) is a private organization that establishes financial accounting and reporting standards for companies and nonprofit organizations in the United States.

SEC

Stands for the Securities and Exchange Commission, a U.S. federal agency responsible for regulating the securities industry and protecting investors.