Question 1
For long-run pricing decisions, using stable prices has the advantage of ________.
◦ minimizing the need to monitor competitor's prices frequently
◦ reducing the need to change cost structures frequently
◦ reducing competition
◦ helping to build buyer-seller relationships
Question 2
Golden Generator Supply is approached by Mr. Stephen, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Golden Generator Supply has excess capacity. The following per unit data apply for sales to regular customers:
| Direct manufacturing labor | 180 |
| Variable manufacturing support | 280 |
| Fixed manufacturing support | 140 |
| Total manufacturing costs | 790 |
| Markup (10% of total manufacturing costs) | 79 |
| Estimated selling price | $869 |
If Mr. Stephen wanted a long-term commitment, and not a one-time-only special order, for supplying this product, calculate the most likely price to be quoted assuming the markup remains the same?
◦ $650
◦ $790
◦ $869
◦ $370
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