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Exam 12: Technology and Operations Management

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Question 1

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An organization's cost base is made up of the total costs associated with delivering the organization's products or services to the marketplace.

A) True
B) False

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Question 2

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Skimming pricing strategy represents a pricing strategy that establishes a low price in hopes of attracting a great number of customers and attempts to discourage competitors.

A) True
B) False

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Question 3

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Barker Brothers Pens utilizes a strategy of low prices to attract customers and discourage competition.This represents a bundling strategy.

Which type of cost provides managers with more control and why?

The nature of the various costs which the organization will face is a key element of understand the configuration of the cost base.

What are variable costs and provide an example.

A skimming pricing strategy establishes a high price in order to earn the highest possible profit while there is little competition.

What does the breakeven point mean for managers?

The relationship between variable and fixed costs impacts the degree of control which a management team has over its cost base.

Virtual Electronics utilizes a strategy to charge a very high introductory price for their automobile video theater.After identifying that their rival firms did not carry this new product,they chose this strategy to achieve maximum profits.Virtual Electronics has chosen a ________ strategy.

Costs incurred regardless of the number of units of a product that are produced or sold are called variable costs.

Gourmet Pets feels its target market is more concerned with perceived quality than actual product cost.They also feel that the newness of this concept offers an opportunity to make high profits since they are the first firm to enter this market,so they face no direct competition.Their decision to charge a high price is consistent with the penetration price strategy.

Demand-based pricing is the process used to determine the profitability of a product at various levels of sales.

A type of indirect costs,called committed costs are costs which the organization commits itself to within an operating year,and which often are spent in advance or at the front end of a manufacturing/sales cycle.

The level of sales revenue or volume which is required in order for the organization to cover all of its costs is called the full contribution point.

Virtual Electronics utilizes a strategy to charge a very high introductory price for their automobile video theater.After identifying that their rival firms did not carry this new product,they chose this strategy to achieve maximum profits.Virtual Electronics has chosen a high-low pricing strategy.

Phil asks you to calculate the break-even point for his firm.You respond that you will need the values for all assets and liabilities.

Barker Brothers Pens utilizes a strategy of low prices to attract customers and discourage competition.This represents a penetration strategy.

The sell pressures which will impact the cost base is an area of focus for managers to develop a good understanding of an organization's cost base.

All of the following are key elements of understand the configuration of the cost base,EXCEPT: