Chapter 13Designing Pricing Strategies and Programs

True/False Questions
1. Price is the only element of the marketing mix to produce revenue. True (moderate) p. 245 2. Price is one of the least flexible elements in the marketing mix. False (easy) p. 245 3. If a firm chooses the objective of current profit maximization, it essentially is ignoring the effect of other elements of the marketing mix. True (moderate) p. 246 4. Nonprofits and public organizations may seek only partial cost recovery, rather than some profit level. True (easy) p. 247 5. Fixed costs are costs that do not vary with production or sales revenue. True (easy) p. 248 6. The CEOs salary is an example of a variable cost. False (moderate) p. 248 7. Consumers are likely to be more price sensitive when the cost is being borne by another party, and when the product cannot be stored. False (moderate) p. 247 8. When a manufacturer varies its cost as a function of its differentiated marketing offers, the manufacturer needs to use activity-based accounting. True (difficult) p. 250 9. Target costing focuses on trying to engineer costs before a new product has been introduced. True (moderate) p. 250 10. One way of estimating the demand curve for your product is simply ask consumers how many units they would buy at different proposed prices. True (moderate) p. 247 11. A decline in average production costs as the firm accumulates more experience is called the learning curve. True (moderate) p. 249 12. Target costing requires determining the price consumers will pay before producing the good or service. True (moderate) p. 250 13. Going-rate pricing is especially popular if costs are difficult to measure or competitive response is certain. False (moderate) p. 253 14. A company that sells bottled water at a premium price is using a markup pricing strategy. False (moderate) p. 250 15. In going-rate pricing, the firm bases its price largely on competitors prices. True (easy) p. 253 16. Retailers that employ everyday low pricing do not run price promotions. False (difficult) p. 253 17. Psychological pricing methods give groups of buyers a deal when they combine their orders. False (moderate) p. 255

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18. A shoe store that carries pumps at $32, $52, and $82, and no other prices, is engaged in product-line pricing. True (moderate) p. 260 19. When Toyota offers an Echo model that includes air, automatic transmission, a CD player, and custom paint at a price below what the individual options would be priced at, it is an example of product-bundle pricing. True (moderate) p. 260 Multiple Choice Questions 20. A common mistake in pricing is _______________. a.) setting prices according to demand b.) revising prices too often c.) considering price and price competition as a key problem in marketing d.) ignoring costs when setting prices e.) setting prices independently of the rest of the marketing mix (difficult) p. 245 21. Scotty is in the process of opening Suburban Legends SK8S to sell boards, wheels, trucks, clothing, videos, and skateboarding related collectibles. The first thing Scotty should do when setting the stores prices is to _______________. a.) determine demand b.) estimate costs c.) determine her target market d.) select a pricing method e.) select a pricing objective (moderate) p. 245 22. A _______________ pricing objective is suitable for a company that has overcapacity, intense competition, and changing customer needs. a.) maximum current profit b.) survival (moderate) p. 245 c.) maximum current revenue d.) maximum sales growth e.) partial cost recovery 23. Which of the following is not a common mistake in handling the pricing P? a.) reliance on committee decisions about pricing (moderate) p. 245 b.) too cost-oriented c.) not revised often enough to reflect market opportunities d.) set independently of other marketing mix variables e.) not varied enough 24. The introduction of a new product to the market using market-penetration pricing is most likely to be successful when _______________. a.) the unit costs of producing a small volume of the product are high b.) there must be no existing demand for the product c.) the market is highly price sensitive (difficult) p. 246 d.) the high price communicates nothing to the potential buyers e.) competitors are not attracted to the market because there is no profit motivation

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25. When introduced in the late 1970s, personal computers had large initial demand. People were interested in buying them to make writing and editing easier. The earliest simple PCs were initially priced at around $2,500. The manufacturers of the first calculator were probably using a _______________ pricing strategy. a.) cost-oriented b.) market-skimming (moderate) p. 246 c.) value-oriented d.) market-penetration e.) product-quality leadership 26. A market segment has a large number of buyers. High initial price does not attract competitors to the market, but it communicates superior product image. In this segment a _______________ is the best strategy. a.) market-skimming pricing (difficult) p. 246 b.) product quality leadership c.) maximum current revenue d.) market-penetration pricing e.) maximum sales growth 27. In 1991, Taco Bell began offering a 59-79-99 cents pricing strategy for its Mexican-themed fast food. It did this by eliminating kitchens and having workers assemble food rather than cook it. Its costs fell as it became more efficient, and the 59-79-99 pricing allowed to Taco Bell to take market share from leaders McDonalds and Burger King. Taco Bell was using a _______________ pricing strategy. a.) market-skimming b.) product quality leadership c.) maximum current revenue d.) market-penetration (moderate) p. 246 e.) maximum sales growth 28. Buyers are more price sensitive when _______________. a.) the product is significantly more distinctive than others on the market b.) the expenditure is a small part of the total cost of the end product c.) they are more aware of substitutes for the product (difficult) p. 247 d.) they cannot easily compare the quality of substitutes for the product e.) the product is perceived to have more quality than others on the market 29. Demand is likely to be price elastic if _______________. a.) there are many alternatives and direct substitutes for the product (difficult) p. 248 b.) buyers do not readily notice price changes c.) buyers are slow to change their purchasing habits d.) buyers think a higher price is justified by quality differences e.) the buyers can use normal inflation to explain the price increase 30. _______________ are costs that do not vary with production or sales revenue. a.) Total costs b.) Average costs c.) Variable costs d.) Fixed costs (easy) p. 248 e.) Marginal costs

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31. Which of the following is an example of a fixed cost? a.) a salespersons commission b.) the portion of your phone bill that does not include long distance charges (moderate) p. 248 c.) delivery costs of a 3-ton refrigeration unit to Kennesaw, Georgia, and another one to Jacksonville, Florida d.) cost of the hiring process to employ a new vice-president of legal e.) extra employees brought in to handle the holiday rush 32. Which of the following is an example of a fixed cost? a.) the CEOs bonus b.) occasional charitable expenses donated by the firm c.) mall rent based on percentage of sales d.) monthly $2,000 payment on loan to buy earthmoving equipment (moderate) p. 248 e.) employees regular salaries as dictated by the union contract 33. _______________ consist of the sum of the fixed and variable costs for any given level of production. a.) Total costs (easy) p. 248 b.) Average costs c.) Variable Costs d.) Fixed Costs e.) Marginal Costs 34. Every time Nike doubles the total number of shoes it has sold, its marketing cost structure falls by a predictable percentage. This is an example of the _______________. a.) leverage effect b.) activity-based pricing concept c.) experience curve (moderate) p. 249 d.) elasticity consumer exhibit for shoe prices e.) target costing principle 35. Which of the following statements describes one of the risks inherent with experience-curve pricing strategy? a.) The aggressive pricing associated with this strategy might give the product a cheap image. (difficult) p. 249 b.) This strategy is an offensive strategy against strong competitors that typically respond quickly to its implementation. c.) The strategy assumes competitors will respond with an even lower price. d.) The strategy leads to expensive innovation, which might not payoff in the long run. e.) The strategy is most efficient in industries where there is little growth potential. 36. When a manufacturer varies its cost as a function of its differentiated marketing offers, the manufacturer needs to use _______________ accounting. a.) standard cost b.) value-added c.) LIFO d.) FIFO e.) activity-based (moderate) p. 250

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37. When a firm is analyzing competitors in order to set its own prices, it needs to _______________. a.) select its pricing method prior to that analysis b.) benchmark its own costs against competitors (difficult) p. 250 c.) never set its price to be the same as its competitors d.) know the benefits its target market wants e.) assume its competitors will not change their prices 38. A maker of generic skateboard decks (blanks) for shops to customize incurs a variable cost of $12 per blank and fixed costs of $500,000. To earn a 20 percent markup on selling price, the manufacturer would charge _______________ for each of the 100,000 blanks it expects to sell. a.) $14.40 b.) $20.40 c.) $21.25 (difficult) pp. 250-251 d.) $37.50 e.) $33.33 39. Lucinda is a maker of wine charms (small, decorative jewelry loops put on wineglass stems to set your glass apart from those of other partiers), and has a variable cost of $4.50 per set of six and fixed costs of $16,000. To earn a 25 percent markup on selling price, Lucinda should charge _______________ for each of the 4,000 sets of charms she expects to sell. a.) $5.63 b.) $6.38 c.) $8.63 d.) $9.63 e.) $11.33 (difficult) pp. 250-251 40. Jane Yellowhair makes small woolen handbags out of Pendleton blankets, and has fixed costs of $30,000. She expects to sell 6,000 bags for $17.50. This price will give her a 20 percent markup. Calculate the variable costs. a.) $5.00 b.) $6.00 c.) $8.50 d.) $9.00 (moderate) pp. 250-251 e.) $10.00 41. Markup pricing is popular because _______________. a.) sellers can determine demand more easily than they can determine costs b.) it motivates manufacturing to find ways to cut costs c.) it works especially well with product positioning strategies d.) it considers the effects of current demand, perceived value, and competition on price e.) many people feel cost-plus pricing is fairer to both buyers and sellers (difficult) p. 251 42. If an entrepreneur commits to her venture capitalists a goal of earning a 30 percent return on equity, it would most likely use a _______________ pricing approach to setting price. a.) markup b.) psychological c.) target-return (moderate) pp. 251-252 d.) going-rate e.) perceived-value

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43. Burlingvale Coats produces winter wear for Target. Their recently designed parkas for the northern stores cost about $30 to produce, and Burlingvale wishes to earn a 15 percent return on an investment of $5 million. If 75,000 parkas will be sold to Target, the appropriate price per item is _______________. a.) $30.00 b.) $37.50 c.) $35.00 d.) $40.00 (moderate) pp. 251-252 e.) $45.00 44. Nixon Watch Co. (www.nixonnow.com) will incur fixed costs of $500,000 and unit variable costs of $20 on its new perpetual calendar quartz model. Nixon plans to price the model at $50. To break even, Nixon must sell _______________ units. a.) 9,876 b.) 16,667 (moderate) p. 252 c.) 18,333 d.) 20,000 e.) 25,000 45. SunCrest Gardening Supply Company wants to sell a polystyrene window planter for $30. Its variable costs for each planter are $12. To break even, SunCrest needs to sell 500 planters. Calculate SunCrests fixed costs. a.) $1,667 b.) $3,600 c.) $6,000 d.) $9,000 (moderate) p. 252 e.) $15,000 46. The price setting method most closely corresponding to the concept of product positioning is _______________ pricing. a.) markup b.) psychological c.) going-rate d.) target-return e.) perceived-value (easy) p. 253 47. A company that sells bottled water at a premium price is using a _______________ pricing strategy. a.) markup b.) target-return c.) perceived-value (moderate) p. 253 d.) going-rate e.) demographic 48. _______________ pricing is a method in which the company charges a fairly low price for a highquality offering. a.) Markup b.) Psychological c.) Target-return d.) Perceived-value e.) Value (easy) p. 253

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49. When a wireless company advertises a low list price that includes free roaming, free weekends, and free long distance as additions to the regular 400 monthly minutes for $35, it is using a _______________ pricing strategy. a.) markup b.) psychological c.) target-return d.) perceived-value e.) value (moderate) p. 253 50. Wal-Mart does not do frequent price-related promotions in favor of keeping the prices as low as possible all the timethis is even reflected in their television advertising. This is an example of ____________ pricing. a.) everyday low (easy) p. 253 b.) high-low c.) going-rate d.) auction-type e.) value 51. In _______________ pricing, the firm bases its price largely on competitors prices. a.) value b.) target-return c.) going-rate (moderate) p. 253 d.) perceived-value e.) geographical 52. Baskin Robbins in Jackson Hole, Wyoming sells single-dip ice cream cones priced at roughly the same price as single-dips at the Coldstone Creamery and Monks ice cream sellers downtown. This information indicates that the Baskin Robbins store uses _______________ pricing. a.) value b.) target-return c.) going-rate (moderate) p. 253 d.) perceived-value e.) geographical 53. When customers buy on the basis of a reference price or because the price conveys a particular quality image to them, they are being influenced by _______________. a.) value pricing b.) the psychology of pricing (moderate) p. 255 c.) the going-rates of competitors d.) value augmented by perception e.) an aggregated marketing plan for pricing 54. According to the research of Farris and Reibstein, how does the marketing mix influence a products price? a.) For products with high brand awareness, high advertising tends to support higher prices in the later stages of the PLC. (difficult) p. 256 b.) High expenditures in advertising have little effect on the sales of a high-quality product. c.) Consumers are willing to pay premium prices for unknown but quality products. d.) The distribution element of the marketing mix has a significant impact on the price. e.) The personal selling element of the marketing mix has little impact on price.

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55. Which of the following is not an important factor when considering the reactions of others to your prices? a.) How will competitors react? b.) Will suppliers raise their prices when they see the companys price? c.) Will the government intervene and prevent the price from being charged? d.) Will the sales force find the price motivating? e.) Will the price cover your costs and meet company objectives? (moderate) p. 256 56. The form of countertrade that involves the direct exchange of goods, with no money and no third party involved is called a(n)_______________. a.) barter agreement (moderate) p. 257 b.) offset c.) compensation deal d.) buyback arrangement e.) sellback arrangement 57. DaimlerChrysler gives technical advice on motor manufacturing to a Chinese firm, and in exchange the firm provides DaimlerChrysler with natural rubber for gaskets and seals. This is an example of a(n) _______________. a.) barter agreement (moderate) p. 257 b.) offset c.) compensation deal d.) buyback arrangement e.) sellback arrangement 58. In which of the following forms of countertrade would the seller receive full payment if the seller agrees to spend a substantial amount of that money in that country within a stated time period? a.) barter agreement b.) offset (moderate) p. 257 c.) compensation deal d.) buyback arrangement e.) sellback arrangement 59. If a chipmaker gives personal computer makers a 2.5 percent discount for paying for their orders within seven days instead of the standard 30 days, the chipmaker is providing them with a _______________. a.) functional discount b.) quantity discount c.) promotional price d.) cash discount (moderate) p. 258 e.) trade allowance 60. A manufacturer of picture frame kits that expects its retailers to provide storage space for the kits would likely offer a _______________. a.) cash discount b.) quantity discount c.) functional discount (difficult) p. 258 d.) distribution allowance e.) slotting allowance

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61. Every August, Fat Tire Ale hosts a bike race and beer tasting festival in Taos, New Mexico. During the festival, local retailers offer _______________ pricing to entice people who come for the festival to come into their stores and buy their merchandise. a.) special-event (moderate) p. 259 b.) seasonal discount c.) promotional allowance d.) psychological discount e.) functional discount 62. Professors and other professional members of the Association for Consumer Policy pay a different membership renewal rate than student members. The Association for Consumer Policy uses _______________ pricing. a.) time b.) customer-segment (moderate) p. 258 c.) service-form d.) captive-market e.) image 63. Passengers on a Delta Airlines flight from Charlotte, North Carolina, to Denver, Colorado, are paying several different fares, depending on when they bought their tickets. In charging these prices, Delta has engaged in _______________ pricing. a.) time (easy) p. 258 b.) functional c.) service-form d.) captive-market e.) image 64. The Dave Matthews Band plays a venue in Richmond, Virginia. The floor seats cost $48, the seats on the edges but close run $36, and the seats in the balconies are priced at $30. This is an example of __________ pricing. a.) psychological b.) image c.) value-added d.) perceived-value e.) location (moderate) p. 258 65. While shopping at Parisian Department Store, you notice all of the neckties are priced at $18.50, $25.00, or $45.00. Parisian is using _______________ pricing. a.) product-line (moderate) p. 260 b.) price-quality c.) optional-feature d.) captive-product e.) customer-segment 66. Onet, an Internet service provider (ISP), charges a membership fee and then a per hour usage charge for access to the Internet. This is an example of which type of product-mix pricing strategy? a.) captive-pricing b.) product-line pricing c.) byproduct pricing d.) customer-segment pricing e.) two-part pricing (moderate) p. 260

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67. You can buy inexpensive printers from Hewlett Packard with many different features, but when you go to buy the toner cartridge refills, the price is often much higher than you expected. This example describes _______________ pricing. a.) product-line b.) price-quality c.) optional-feature d.) captive-product (moderate) p. 260 e.) customer-segment 68. When renewing her subscription to Rolling Stone magazine, Guillermina was given the opportunity to purchase a subscription to Spin magazine, to get a Rolling Stone travel umbrella, and to purchase a membership in a discount music club all for one low price. The magazine publisher has engaged in _______________ pricing. a.) product-bundling (moderate) p. 260 b.) product-line c.) by-product d.) captive-product e.) two-part 69. A manufacturer of industrial drill equipment needs to make a price adjustment. The firm is concerned about the volatility of the price of industrial diamonds and forged steel that go into making its products. This manufacturers best price adjustment strategy would be _______________. a.) adoption of delayed quotation pricing b.) use of escalator clauses (difficult) p. 262 c.) product bundling d.) unbundling goods and services e.) reduction of discounts Essay Questions 70. Diamond Machine Technology makes a tool for sharpening the blades of pruning sheers and glass clippers. The company has invested $250,000 in developing this sharpener. This tool, which is about the size of a piece of chewing gum, costs $3 to make. Fixed costs for the sharpener is $10,000. The company expects to sell 100,000 sharpeners this year. Diamond Machines markup on sales is 30 percent, and it wants to earn a 20 percent ROI. Calculate both its markup price and its target-return price as well as its breakeven volume at both prices. Which price should Diamond Manufacturing use? Answer: (difficult) pp. 250-252 71. Goldstar, a Korean manufacturer, has decided to make and market small (125cc-250cc) motorcycles in the United States. Explain in detail the six-step procedure Goldstar should use setting the prices for their products. Answer: The six steps are: 1) selecting the price objective; 2) determining demand; 3) estimating costs; 4) analyzing competitors costs, prices, and offers; 5) selecting a pricing method; and 6) selecting the final price.

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Each of these can be expanded upon, for example, there are five major objectives listed in the text: survival, maximum current profit, seeking market share, market skimming, and product-quality leadership. a.) Goldstars early motivation might be to get a foothold in the market. This would be seeking market share. b.) Goldstar needs to determine the demand for small motorcycles in the United States. They might do this by examining public records for motorcycle registrations and enrollments in Motorcycle Safety Foundation courses. c.) Goldstar must estimate its own costs to produce and move the motorcycles through the distribution channel. This is effectively a floor to the price Goldstar can charge. d.) Goldstar needs to understand the cost structures, prices charged, and offers by the competition in the marketplace. Most small motorcycles sold in the United States are made by the big four Japanese firmsHonda, Yamaha, Kawasaki, and Suzuki. e.) Goldstar may want to follow its fellow Korean companies by entering the Unites States with a value pricing strategy. There are certainly other options, including going-rate pricing and markup pricing. A value strategy implies that the bikes would be of equal quality at lower prices than the competition. f.) Goldstar then needs to select the final prices for the bikes. The possible range is probably between $800 and $2,200, depending on all the factors above, as well as the power of the distributors in the channel. (difficult) pp. 245-256 72. Mattel wishes to sell Barbie dolls in an area of the world where local currency cannot be converted and local distributors are forbidden to hold any outside currencies. Explain the four ways in which this challenge might be taken care of by Mattel using countertrade methods. Answer: The four methods are: barter, compensation deal, buyback arrangement, and offset. a.) Mattel might use barter, by offering to trade straight across 100,000 Barbies for 35,000 bolts of locally-manufactured textiles (which Mattel would then sell in another marketplace for cash). b.) Mattel might use a compensation deal, wherein they accept some local currency to be used when Mattel executives travel in the country, and the rest of the deal is paid in products, such as the textiles mentioned above. c.) Mattel might use a buyback arrangement, in which they fund a small production facility in the country, and agree to be paid back over time in dolls produced there, rather than in currency. d.) Mattel could use the offset method, by accepting full payment in the nonconvertible currency and then immediately or over time spending that currency in the country for other exportable goods which Mattel could then resell. (moderate) p. 257 73. A U.S. condiment manufacturer wants to market its product internationally, but its marketing director is concerned about countertrading. What you can tell her about countertrading? Which forms should she expect to have to deal with if she plans on selling her products to Eastern Europe? Answer: American companies are often forced to engage in countertrading if they want to do business in certain countries. Countertrades may account for 15 to 20 percent of world trade and take the following forms: (1) Barter is the direct exchange of goods with no money and no third-party involvement. (2) In a compensation deal, the seller receives some percentage of the payment in cash and the rest in products. (3) In a buyback arrangement, the seller sells a plant, equipment, or

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technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment. (4) In an offset, the seller receives full payment in cash but agrees to spend a substantial amount of that money in the buying country within a stated period of time. The marketing director can expect to deal with all of the above except a buyback arrangement. (moderate) p. 257 74. Provide an explanation and examples of the ways in which a firm might use discriminatory pricing. When does price discrimination work? Answer: The text provides examples of six ways in which discriminatory pricing could be carried out: customer-segment pricing, product-form pricing, image pricing, channel pricing, location pricing, and time pricing. a.) Customer-segment pricing means that the customer groups have something different about them, such as charging less for senior citizens at movies versus what the general public has to pay. b.) Product-form pricing means that you price different forms of the same product differently. For example, you might charge more per ounce for laundry detergent, depending on the total amount purchased. c.) With image pricing, the seller can actually sell the same product packaged differently for different prices. This happens with tirestire-makers sell their own brands, and sell the very same tire with a different brandmark for another price, due to the difference in prestige of the brands offered. d.) Distributing product at different locations is another opportunity to discriminate in pricing. As an example, popcorn sold at the movies is priced much higher than popcorn sold at a school fair. e.) Using different channels affords the opportunity to charge different prices. A bottle of beer at the grocery store might cost $1, whereas when the same amount of beer is sold either in a bottle or on tap at a bar, the price might double or even triple. f.) Airlines use time pricing to discriminate in prices to different customers. They vary the price according to day of the week and time of day, as well as using other factors to help them fill the maximum amount of seats. Discrimination works when: (1) the market is segmentable and different segments have different levels of demand; (2) those who qualify for the lower costs cannot resell to those that do not; (3) competitors cannot undersell the higher prices; (4) the cost of segmenting doesnt exceed the additional revenue derived by discrimination; (5) customers are not antagonistic because of the differences, and; (6) the discrimination is not illegal. (moderate) pp. 257-259

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Mini-Cases
Mini-Case 13-1 Fugazi is a punk band from Washington, DC. The leader, Ian, insists that the band not focus on the commercial aspects of making music, so the band typically charges no more than $6 for a live show, they sell no tee-shirts or other Fugazi gear, and they will only play in all-ages venues. To increase creative and financial control, Ian and other members of the band package and sell their self-produced CDs, which they sell for $10 online. 75. Refer to Mini-Case 13-1. When it comes to pricing their music, Fugazi uses the ________ method. a.) value (moderate) p. 253 b.) going-rate c.) markup d.) skimming e.) target-return 76. Refer to Mini-Case 13-1. The underlying objective or philosophy used by Fugazi in setting their prices is probably a.) survivalin this case, keeping the band alive b.) maximum current profitusing the strict definition in the book c.) maximum market sharein this case, getting as many people to listen to the band as possible (moderate) p. 246 d.) market skimmingusing the strict definition in the book e.) product-quality leadershipthe logic being that offering the best music possible will cost more than providing average-quality music 77. Refer to Mini-Case 13-1. Every time Fugazi tours, they are able to pick up more ideas about how to minimize the costs of going on tour, in order to make a fair and increasing return for their efforts. This is an example of _______________. a.) total costs falling b.) activity-based accounting c.) target costing d.) the learning curve (moderate) p. 249 e.) consideration of customers demand schedules Mini-Case 13-2 According to an article in the March 1935 issue of Fortune magazine, cement as we know it today first appeared in 1872. In 1890, 336,000 barrels were produced. In 1910, it was 76,500,000 barrels. By 1929, the concrete industry was producing 169,000,000 barrels annually. Cements growth was directly linked to the construction of roadways for the automobile. Because of its primary usage, there were strict regulations developed as to its content. As a result, the only way that one cement manufacturer differed from another was price. While a cement maker at the time might contend that its cement was superior to the others on the market (and most of them made this contention), no cement company was able to translate this added value into price. Another distinguishing characteristic of the cement industry was the ratio between a companys selling price and its transportation costs. A barrel of cement weighed 376 pounds and cost $.42 to ship 50 miles. Fixed costs for International Cement Company (just 50 miles west of New York City) in 1935 were $64,000,000. Much of International Cements products were sold in New York City, where cement sold for $2.40 regardless of how far away it was manufactured. Variable manufacturing costs per barrel were $.70; it takes 600 pounds of ingredients to make one barrel.

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78. Refer to Mini-Case 13-1. Buyers of cement were very price sensitive because _______________. a.) there were no brands that appeared to be superior to any others (difficult) p. 247 b.) there were no substitutes for cement c.) the purchase of cement was not a large part of the total cost of building a road d.) the cement can be easily compared because of the requirement that every bag of cement meets the specifications set out by the American Society for Testing Materials e.) cement can be easily stored 79. Refer to Mini-Case 13-1. Calculate the break-even volume in barrels for the International Cement Company. a.) 17,679,559 b.) 26,666,667 c.) 37,647,059 d.) 50,000,000 (moderate) p. 252 e.) 152,380,953 80. Refer to Mini-Case 13-1. What type of pricing structure was being used in the cement industry in 1935? a.) value b.) going-rate (moderate) p. 253 c.) markup d.) perceived-value e.) target-return

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