Accounting ch. 5
Net Pay
Amount of income left after taxes and deductions have been taken out.
Gross Pay
Amount of salary or wages earned for a certain period of time before deductions.
JIT
Believe that companies shouldn't hold inventory due to the costs incurred to maintain inventory and because inventory hides problems. IT IS A PULL SYSTEM!
Life-Cycle Pricing
Company attempts to establish a selling price based on costs that will earn it a return over the life of the product.
Target Pricing
Company first determines selling price of the product based on market survey
Skimming Pricing
Company sets the selling price high for its product. (used due to the products uniqueness; EX: fashion clothes that are high in price)
Penetration Pricing
Company sets the selling price low in order to gain a share of the total market for its goods and services.
Selling Price (equation)
Cost + (Cost x Markup)
Commission Pay
Employee's pay is based on a percentage of sales that the employee makes
Price Gouging
Pricing products unreasonably high when the need is great or when consumers do not have other choices (used in order to receive short-term excessive profits).
Markup
A dollar amount added to the cost of products to get the selling price.
Bonus
A fringe benefit that is subject to the occurrence of some future event.
Oligopoly
A type of environment, that exists when a few firms control the types of products and services and their distribution; a degree of competition in which just a few sellers dominate the market. (EX: smart phone companies, pharmaceuticals, health insurance etc.)
Pure Competition
A type of environment, where a large number of sellers produce and distribute virtually identical products and services. (EX: agricultural products: corn, wheat, soybeans etc.)
Monopolistic Competition
A type of environment, where many companies produce similar , but not identical, products; and where the market has a large impact on, but no control over, prices. (EX: restaurant businesses, hotels, bars etc.)
Monopoly
A type of environment, where the government imposes legal constraints on companies that have a select control over a product, service, or geographic market. (the only business/company that sells that product or service; EX: WPS in Wisconsin)
Piece-Rate Pay
Employee's pay is based on the number of units that the employee produces
Salary Pay
Employee's pay is the same each pay period regardless of hours worked.
Price Fixing
Occurs when a group of companies agree to charge one (usually high) price for the same good or service. THIS IS ILLEGAL IN THE U.S.
Selling Margin Percent (selling price - cost)
Selling Margin/Selling Price
Predatory Pricing
Selling a product below cost in order to drive out the competition, control the market, and then raise the price. ILLEGAL
Hourly Pay
The employee is paid a certain amount per hour.
Dumping
When a company sells its products below cost in foreign countries.