Kindly explain this limitation in pricing decisions in CVP analysis 1. Rationality 2. Multiple Reactions 3. Single VS Multiple Products and 4. Non-price Variables.
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Kindly explain this limitation in pricing decisions in CVP analysis
1. Rationality 2. Multiple Reactions 3. Single VS Multiple Products and 4. Non-price Variables.
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- What is false about cost plus mark-up pricing? a. attempts to apply or allocate fix costs to pricing strategy b. not intuitive c. good example of value-based pricing d. vulnerable to bad sales estimates e. All are correct f. All are incorrectA weakness associated with cost-based pricing methods is that they do not allow for primary pricing. infer a cost-price ratio. do not allow for predatory pricing are structurally inflexible and ignore vertical price fixing alternatives. none of the above.Which of the following pricing offers the right combination of good quality and service at a fair price? Question 1 options: A) Cost-based pricing B) Value-added pricing C) Good-value pricing D) None of the above
- Which of the statement is not a true reflection of Target cost gap ? The target cost gap = Estimated product cost - Target cost The first step is to establish a competitive market price TheTarget cost gap is established in the 4th step of the target cost process A target cost gap is predeterminedDiscuss (i). The notions and purposes of CVP Analysis, and (iii) The Components of CVP Analysis (Break-Even Analysis, Target Analysis, Margin of Safety Analysis, Sales-mix Analysis and others)Enumerate and explain briefly the limitations of using CVP analysis in pricing decisions.
- Define price elasticity of demand. Give an example of a product with relatively elastic demand and an example of a product with relatively inelastic demand. (Give examples not given in the text.)Although the cost-plus approach to product pricing may be used by management as a general guideline, what are some examples of other factors that managers should also consider in setting product prices?In the application of lower-of-cost-or-market, market is the (a) lowest sales price. (b) highest sales price. (c) replacement cost. (d) average sales price.
- The line that begins at the origin on a CVP graph represents total expenses. total fixed expenses. total sales revenues. both the total expenses and the total sales revenues. Which of the following best describes the concept of a "constraint?" Expected future costs that differ among alternatives. None of the items in this list of answers. A benefit foregone by choosing one alternative course over another. The distribution of all products to be sold.Which of the following is not a feature of full costplus sales pricing related to a range of a company’sproducts? it may not maximise profitit distinguishes between variable, fixed and opportunity costsit requires the apportionment of shared costsit ignores the relationship between demand and pricesWhich of the following statements regarding assumptions and limitations of CVP analysis is not correct? Multiple Choice If unit prices change (for example, if the unit prices are lower for higher volumes), CVP analysis cannot be used. CVP analysis relies on certain assumptions and these assumptions might limit the applicability of the results for decision making. CVP analysis is a tool that the manager can use to help with decisions. The assumptions of constant unit variable cost and constant unit prices for all levels of volume as important limitations of CVP analysis. The limitations are due to the assumptions that the cost analyst makes; that is, they are not inherent limitations to the method of CVP analysis itself.
