Marketing Management Short question and Answer Set 3

Question No. 13 What are production point and zonal delivery pricing policies?

Production point pricing policy is one in which the firm quotes ex-factory price. It does not bear the transportation cost. Such a policy may be ‘ex-factory’ or ‘free on rail’ (F O R.).

Zonal delivery pricing policy is one where the firm divides the country into different zones and quotes uniform price for each zone.

Question No. 14 Briefly explain the marginal cost pricing method.

In marginal cost pricing method, price is calculated on the basis of variable cost instead of total cost. Variable cost is the cost that varies with the level of production such as labour material, power, etc ,

Marginal cost ignores the fixed cost, i.e., the cost which remains constant and does not change with change in the level of production. Marginal cost refers to the change on cost of production, which is affected by increase or decrease in one unit of production.

Question No. 15 (a) Give the assumptions of marginal costing, (b) What do you mean by transfer price?

(a) The basic assumptions of marginal costing are:

(i) All elements of cost-production, administration selling and distribution can be segregated into fixed and variable components.

(ii) The selling price per unit remains unchanged or constant at all levels of activity.

(b) A transfer price is a price used to measure the price of goods or services furnished by a profit centre to other responsibility centres within a company.

Question No. 16 (a) What is breakeven point?

(b) What do you mean by standard cost?

(a) Break-even point is that point of sales volume at which total revenue is equal to total cost. It is a point of no profit, no loss. A business is said to break even when its total sales are equal to its total costs.

(b) It is the amount the firm thinks a product or the operation of a process for a period of time should cost, based upon certain assumed conditions of efficiency, economic conditions and other factors.

Question No. 17 What is break-even pricing method?

Break-even pricing method helps in knowing the level of output where the revenues will be equal to cost, assuming a certain selling price. Break-even point (B E.P.) represents that level of production at which there is no profit and no loss.

Question No. 18 Define sales promotion.

Sales promotion has been defined as, those marketing activities, other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness, such as displays, shows and demonstrations, expositions and various non current selling efforts not in ordinary routine.

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