Describe the five pricing objectives
What will be an ideal response?
• Surplus Maximization — four equations comprise the surplus maximizing pricing model, which focuses on yielding the largest possible surplus or profit for the organization.
• Cost Recovery — a portion of the costs or the full costs are recovered
• Market Size Maximization — nonprofits maximize the number of users, making up for lower margins with volume
• Social Equity — services are priced to contribute to social equity (e.g. subsidized services for the poor)
• Market Disincentivization — pricing discourages people from purchasing a product or service (e.g. government tax on cigarettes)
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Bill Sharpe, owner of Sharper Knives Inc, is closing his business at the end of the current fiscal year. His sole asset, the knife-sharpening machine, is three years old. A depreciation table for the asset is shown below
Bill has agreed to sell the machine at the end of the year for $100,000. What is the impact on taxes from the sale of the machine? (Assume that Sharper Knives claimed a regular depreciation expense in the calculation of income taxes.) The tax rate is 35%. Round your answers to the nearest dollar. Depreciation Table for Knife Sharpener Year Basis Rate Depreciation Expense Accumulated Depreciation 1 $250,000 14.29% $35,725 $35,725 2 $250,000 24.49% $61,225 $96,950 3 $250,000 17.49% $43,725 $140,675 4 $250,000 12.49% $31,225 $171,900 5 $250,000 8.93% $22,325 $194,225 A) $3,264 tax refund from IRS B) $3,264 additional taxes owing to IRS C) $14,236 tax refund from IRS D) $14,236 additional taxes owing to IRS E) $38,264 tax refund from IRS
Forms for filing the estate tax may be obtained from the U.S. Postal Service or the Internal Revenue Service
Indicate whether the statement is true or false.