Question 5 – Transfer Price Division A‚ which is part of the ACF Group‚ manufactures only one type of product‚ a Bit‚ which it sells to external customers and also to division C‚ another member of the group. ACF Group’s policy is that divisions have the freedom to set transfer prices and choose their suppliers. The ACF Group uses residual income (RI) to assess divisional performance and each year it sets each division a target RI. The group’s cost of capital is 12% a year. Division A Budgeted
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Answers to Warm-Up Exercises E8-1. Total annual return Answer: ($0 $12‚000 $10‚000) $10‚000 $2‚000 $10‚000 20% Logistics‚ Inc. doubled the annual rate of return predicted by the analyst. The negative net income is irrelevant to the problem. E8-2. Expected return Answer: Analyst 1 2 3 4 Total Probability 0.35 0.05 0.20 0.40 1.00 Return 5% 5% 10% 3% Expected return Weighted Value 1.75% 0.25% 2.0% 1.2% 4.70% E8-3. Comparing the risk of two investments Answer: CV1 0.10 0.15 0.6667 CV2 0.05
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Pricing Strategy To set a pricing strategy‚ there are number of steps taken into consideration as follows: Step 1: Our pricing objectives are to maximize market share and increase sales volume. This strategy will be used when TrackR is being launched into the market. We charge a reasonable price in order for TrackR to be accessible in the market as quickly as possible and also to encourage the interest and excitement of a product. Because of the low price‚ we are able to raise the sales volume easily
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Consumer resistance to innovations: the marketing problem and its solutions This article describes the major barriers which create customer resistance to innovations. This understanding is important because of the high rate of new product failure. A major cause for this is consumer resistance‚ although consumers are pro-innovation. It’s a normal‚ instinctive response of customers. This article suggests marketing strategies to overcome these barriers. Innovation resistance can appear in customers
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Miguel Rodriguez Unit 6‚ Exercise 1 1. Research by looking for information from three different types of sources: * Online sources * Print sources * Empirical sources Triangulation is used by researches in order to find out if the information is reliable from all three sources. If not‚ say only two sources are reliable‚ there leaves room from some doubt. 2. Primary sources – Actual records of artifacts‚ like letter‚ photographic‚ videos‚ memoirs‚ books‚ or personal papers that were created
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Heat transfer is a discipline of thermal engineering that concerns the generation‚ use‚ conversion‚ and exchange of thermal energy and heat between physical systems. Heat transfer is classified into various mechanisms‚ such as thermal conduction‚ thermal convection‚ thermal radiation‚ and transfer of energy by phase changes. Engineers also consider the transfer of mass of differing chemical species‚ either cold or hot‚ to achieve heat transfer. While these mechanisms have distinct characteristics
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Hong Kong’s environmental problems and solutions Hong Kong is one of the top financial centers in the world. Thus‚ the environmental quality of Hong Kong is very important. It is because the environmental quality is indirectly linking to the image of Hong Kong. Moreover‚ the living standard of Hong Kong residents is also under influencing of the environmental quality. However‚ Hong Kong is now surviving serious environmental problems. Poor air quality‚ noise problem and heavy traffic loads are
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environment. This is indeed the case with its implementation of its pricing strategy‚ which is one of localisation rather than globalisation. Table II illustrates the comparative Big Mac prices (flagship brand of McDonald’s) from around the world. It succeeds in highlighting the point that McDonald’s has had to come up with different pricing strategies for different countries. More importantly‚ rather than just having a different pricing policy for the Big Mac in these listed countries‚ McDonald’s has
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Developing Pricing Strategies and Programs Marketing Management Price Changing in the Internet Internet reverse the fixed pricing trend‚ since: Buyers can: Get instant price comparisons from thousands of vendors. Name their price and have it met. Get products free. Both Buyers and Sellers can: Negotiate prices in online auctions and exchanges Sellers can: Monitor customer behavior and tailors offers to individuals. Give certain customers access to special prices. Consumer Psychology
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COMPREHENSIVE CASE SOLUTIONS – CHAPTERS 12 - 21 NOTE: The cases related to these solutions are posted on our website www.mcgrawhill.ca/olc/buckwold. They are not printed in the text. Solution to COMPREHENSIVE CASE ONE Seacourt Restaurants All of the issues in this case have been examined in depth in problems and cases of previous chapters and therefore the following solution briefly refers to the main issues of each segment. Where applicable‚ tax rates are assumed to be: Individual Corporation
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