Fill in the blank(s) to complete each statement. 1.The estimated long-run cost per unit of a...

Question:

Fill in the blank(s) to complete each statement.

1. The estimated long-run cost per unit of a product or service that enables the company to achieve the target operating income per unit when selling at the target price is called the _____.

2. _____ is a systematic evaluation of all aspects of the business functions in the value chain, whose key objective is to reduce costs and achieve a quality level that satisfies customers.

3. Costs that have not yet been incurred but, based on decisions that have already been made, will be incurred in the future are called _____ costs.

4. _____ tracks and accumulates the business function costs across the entire value chain from a product's initial R&D to its final customer servicing and support.

5. The practice of charging different customers different prices for the same product or service is called _____.

6. The practice of charging a higher price for the same product or service when demand for it approaches the physical limit of the capacity to produce that product or service is called _____.

7. A company engages in _____ when it deliberately prices below its costs in an effort to drive competitors out of the market and restrict supply, and then raises prices rather than enlarge demand.

Defining Pricing:

In business, economics and finance, pricing is the process of assigning a value to a given product, typically through one of three methods: 1) competitive pricing, 2) cost-based pricing or 3) demand-based pricing. Although the terms ''cost'' and ''pricing'' are often used interchangeably, they do not mean the same thing. For example, cost refers to a company's investment in a product, while the price is what consumers pay for the product (or service).

Answer and Explanation: 1


The answers to the fill-in-the-blanks given in the question are as follows:

1. The estimated long-run cost per unit of a product or service that enables the company to achieve the target operating income per unit when selling at the target price is called the target cost per unit.

2. Value engineering is a systematic evaluation of all aspects of the business functions in the value chain, whose key objective is to reduce costs and achieve a quality level that satisfies customers.

3. Costs that have not yet been incurred but, based on decisions that have already been made, will be incurred in the future are called locked-in costs.

4. Life-cycle costing tracks and accumulates the business function costs across the entire value chain from a product's initial R&D to its final customer servicing and support.

5. The practice of charging different customers different prices for the same product or service is called price discrimination.

6. The practice of charging a higher price for the same product or service when demand for it approaches the physical limit of the capacity to produce that product or service is called peak-load pricing.

7. A company engages in predatory pricing when it deliberately prices below its costs in an effort to drive competitors out of the market and restrict supply, and then raises prices rather than enlarge demand.


Learn more about this topic:

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Economic Factors of Pricing and Pricing Strategy

from

Chapter 11 / Lesson 10
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When a company makes a change in pricing, it is usually in response to inflation or recession. These two tactics are explained to better understand the intricacies involved in devising and implementing a cost strategy.


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