【正文】 427 CHAPTER 19 PRICING AND PROFITABILITY ANALYSIS QUESTIONS FOR WRITING AND DISCUSSION 1. Perfectly petitive markets are characterized by the following: many buyers and sellers—no one of which is large enough to influence the market。 a homogeneous product (one pany’s product is virtually identical to any other pany’s product)。 and easy entry into and exit from the industry. Commodity markets for agricultural products such as wheat, soybeans, and pork bellies are close to perfectly petitive. Similarly, gas stations in a city face petitive conditions. A gas station may try to differentiate itself to move to a more monopolistically petitive situation. For example, it might offer car washes, certain grocery staples, or full service. 2. The markup percentage on cost of goods sold is equal to selling and administrative expense plus desired operating ine divided by cost of goods sold. The markup is not pure profit because it includes selling and administrative expense. 3. Target costing is a method of determining the cost of a product or service based on the price that customers are willing to pay. In essence, target costing is price driven. Once the target price is determined, the cost is calculated by subtracting desired profit from price. The remainder is the target cost. 4. Peration pricing is the pricing of a new product at a low initial price, perhaps even lower than cost, to build market share quickly. Price skimming is a pricing strategy in which a higher price is charged at the beginning of a product’s life cycle and then lowered at later phases of the life cycle. 5. There are a number of possible reasons。 here are two. First, interstate highway gas purchasers are often tourists. They do not have a longterm relationship with the gas station owner。 therefore, the price charged may be higher. Second, the drivers may be able to choose among a larger number of peting gas stations in town. 6. Price discrimination is the charging of different prices to different customers for essentially the same modity. It is legal in some instances. For example, if price discrimination is necessary to meet petition or is based on cost differences in serving different customers, it is legal. 7. Firms measure profit for a number of reasons. These include determining the viability of the firm, measuring managerial performance, and determining whether or not a firm adheres to government regulations. Regulated firms must measure profit to ensure that they earn a rate of return, which stays within certain boundaries. Regulated firms typically have prices set for them. They must keep careful cost records to match with the prices to determine allowable profit. 8. A segment is any portion of a firm. Segments may be product lines, divisions, regions, customer classes, and so on. A pany measures segmental profits to ensure that the various subdivisions of the pany are contributing to overall profitability. A segment which is not profitable may be dropped. 9. Alpha Company may continue to produce and sell “Loser” because (a) customers of all lines prefer to deal with a “fullservice” pany (., if Loser is dropped, customers will purchase profitable products elsewhere)。 (b) Loser is projected to begin making a profit in a year or so。 (c) workers on the Loser line are learning new technology with spillover benefits for all products。 and (d) Loser is really part of the marketing efforts for the entire pany. 10. Absorption costing differs from variable costing in that fixed factory overhead is included in unit cost under absorption costing. The result is that absorptioncosting operating ine is sensitive to fluctuations in inventory. Increases in inventory during a period will raise absorptioncosting ine above variablecosting ine. The reverse is true if inventory decreases during a period. 428 11. Net ine must be calculated for external reporting purposes. An advantage is that ine is calculated according to GAAP so outside parties have an understanding of the way in which ine is calculated. Net ine is fairly objective。 the rules remain relatively stable from year to year. Managers, therefore, know how the measure is calculated and can work to improve performance by increasing revenues and/or decreasing expenses. Net ine also has disadvantages. Net ine does not include the cost of capital employed to operate the business. As a result, ine can be positive while the pany is destroying wealth. Net ine can be manipulated by building up inventories. Net ine can be increased in the short run by taking actions that are detrimental to the longrun wellbeing of the firm (., foregoing maintenance and employee training). 12. Firms may measure customer profitability when groups of customers differ in the amount and cost of services provided. A firm would not be interested in measuring customer profitability if all customers receive the same services at the same cost. 13. Sales price and price volume variances may be puted from actual and expected revenue amounts. These variances help managers to determine what factors led to a difference between actual and planned revenue. 429 EXERCISES 19–1 1. The flowergrowing industry has the characteristics of perfect petition. There are many buyers and sellers, no one of which has much control over the market price and quantity sold. The price will not be affected by Elaine’s entrance into the market. The barriers to entry are low. There appears to be good information regarding prices charged. 2. Given the perfectly petitive structure of the industry, Elaine should charge $ per bunch. She can sell all that she wants to at that price. To charge less