Describe three limitations of the economic, profitmaximizing model of pricing.

Q: Cost-Savings Sharing Pricing Defined?

A: It is a project pricing technique where the savings in the cost of the project are mutually shared…

Q: What are the optimal prices and profits for pure bundling.

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: Under what conditions is a market-based transfer price most likely to be used?

A: Transfer Pricing: It is termed as the cost which is charged by the one department of the company…

Q: Discuss the market efficiency and its three forms.

A: The efficient market hypothesis (EMH)- states that the markets are generally efficient as it…

Q: What is a transfer price? What are the three main approaches to setting transfer prices?

A: Transfer pricing:   Transfer pricing refers to the setting of prices for goods and services that are…

Q: What are the calculation formulas for transfer pricing?

A: There are many methods for determining the transfer price. Most businesses actually set the transfer…

Q: Define semistrong form of market efficiency

A: Answer: Efficient market is one where the market price constitutes a balanced estimate of…

Q: Which of the statement is not a true reflection of Target cost gap ?   The target cost gap =…

A: target costing is the way in which deriving of a target cost is done to set the production manager…

Q: Describe three alternative cost-plus pricing methods.

A: Target Costing:Target costing refers to the cost that is ascertained as per the needs and wants of…

Q: Understand and apply the lower-of-cost-or-net realizable value rule.

A:

Q: Discuss the assumptions, approach, estimation, benefits, limitations, and criticisms of Arbitrage…

A: Arbitrage Pricing Theory is a multi-factor pricing model. Arbitrage Pricing Theory can be used to…

Q: Describe the downward demand spiral and its implications for pricing decisions.

A: Downward Demand Spiral: A downward demand spiral is a continuing reduction in the demand for a…

Q: “Transfer pricing is confined to profit centers.” Do you agree? Explain.

A:

Q: Distinguish between market-skimming pricing and market-penetration pricing.

A: Product pricing strategies: There are two product pricing strategies of a company. They are,…

Q: On what concept is the price-earnings multiple valuation approach based?

A: Price earning ratio is computed by dividing the market price of the share by the earnings per share.

Q: What are the optimal prices and profits for selling the goods seperately?

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: Describe three alternatives of cost-plus pricing methods?

A: Cost-plus pricing is a method in which the selling price is set by evaluating all variable costs a…

Q: Under what conditions is a market-based transfer price optimal?

A:

Q: Describe two alternative approaches to long-run pricing decisions.

A:

Q: According to our authors, explain the concept of “lower-of-cost-or-market.”

A: When a company prepares its financial statement, it reports certain items in the financial statement…

Q: iven the information below, calculate the reward-to-risk ratio implied by the CAPM pricing model.

A: The risk-reward ratio determines how much reward is there for risk of  every dollar.

Q: Given the weaknesses of cost-based pricing, why wouldany company use this method?

A: Cost-based pricing means setting prices based on the cost of goods and services.  The major…

Q: Explain how cost-of-carry is a factor in forward curve prices.

A: Cost of carry is the costs of holding the certain position in the market or in other words it is the…

Q: Distinguish between the downward demand spiral and the ramifications of this for price choices

A: This question tells about  the downward demand spiral and the ramifications of this for price…

Q: Explain CMO Price Behavior and Prepayment Rates?

A: The question is based on the concept of Collateralized Mortgage Obligations (CMO) , interest rate…

Q: What are the three major influences on pricing decisions?

A: Pricing Decisions:Pricing decisions are those decisions that are related to ascertain the price of a…

Q: Give two reasons why the dual-pricing system of transfer pricing is not widely used.

A:

Q: Discuss the key assumptions of Arbitrage Pricing Theory (APT) model and the implications of these…

A: Solution- APT(Arbitrage Pricing Theory) is a multi-factor technical model supported the link between…

Q: Explain price/EBITDA ratio

A: The EV/EBITDA ratio compares a company's enterprise value to its earnings before interest, taxes,…

Q: List four reasons often cited for the widespread use of absorption cost as the cost base in…

A: Cost-plus-pricing approach: The pricing approach used by the companies to set the target selling…

Q: Explain the objectives of transfer pricing and describe the advantages anddisadvantages of various…

A: Transfer pricing in tax and accounting relates to the laws and procedures for the selling/buying…

Q: Identify three cost-based transfer prices. What are the disadvantages of cost-based transfer prices?…

A: Transfer Pricing: It is the value at which goods and services are transferred from one unit to…

Q: Explain the following assertion: “Price setting generally requires a balance between market forces…

A: Businesses have to make a lot of decisions in running a business one of which is price setting. They…

Q: List the four common cost bases used in cost-plus pricing. How can they all result in the same…

A: The profits can be arrived from the income statement of the company. All the revenues, and expenses…