7. Decision Making
Pricing Decisions — Quiz
Test your understanding of pricing decisions with 5 practice questions.
Practice Questions
Question 1
Which pricing strategy involves setting a price based on the perceived value of a product or service by the customer, rather than on the cost of production?
Question 2
A company is developing a new product. The market research indicates that customers are willing to pay $$ \$200 $ for this product. If the company desires a $ 30\% $$ profit margin on the selling price, what is the maximum allowable cost per unit using target costing?
Question 3
Which of the following is a key advantage of using contribution pricing?
Question 4
When a business sets its prices primarily based on competitor prices and market demand, it is employing which type of pricing strategy?
Question 5
A company has a total fixed cost of $$ \$80,000 $. The variable cost per unit is $ \$15 $. If the company sells $ 6,000 $ units at a selling price of $ \$30 $$ per unit, what is the total profit?