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Accounting Test 5
| Term | Definition |
|---|---|
| A fringe benefit contingent on the occurrence of some future event. | Bonus |
| The form of income on which the bonus is based. | Bonus base |
| The percentage the bonus will pay. | Bonus rate |
| Payment for services rendered based on a percentage of revenue generated. | Commission pay |
| The amount of inventory needed each business day. | Daily demand |
| Selling products below cost in a foreign market. | Dumping |
| The full amount an employee earns. | Gross pay |
| Payment for services rendered based on the number of hours worked. | Hourly pay |
| A pull system that uses cards to visually signal the need for inventory. | Kanban system |
| The number of days elapsing from the time the order is placed until the order is received. | Lead time |
| A pricing strategy where the company attempts to set a selling price for the life of the product based on its total life-cycle costs. | Life-cycle pricing |
| An additional amount over cost that is added to determine selling price. | Markup |
| An environment in which there are many companies whose products/services are similar but not identical. | Monopolistic competition |
| A company that has exclusive control over a product, services, or geographic market. | Monopoly |
| The employee’s take home pay. | Net pay |
| An environment where a few firms control the types of products and services and their distribution. | Oligopoly |
| Pricing strategy where a company sets its initial selling price low in an attempt to gain a share of the market from its competitors. | Penetration pricing |
| Payment for services rendered based on the number of items completed. | Piece-rate pay |
| The practice of selling products below cost in an attempt to drive out competition, control the market, and then raise prices. | Predatory pricing |
| When a group of companies agree to limit supply and charge identical prices. | Price fixing |
| The practice of setting excessively high prices. | Price gouging |
| An environment where a large number of sellers produce and distribute virtually identical products and services. | Pure competition |
| A reduced purchase price due to the amount purchased. | Quantity discount |
| The inventory level that, when reached, indicates the need to place an order for additional inventory. | Reorder point |
| A small amount of inventory kept om hand to avoid stockouts. | Safety stock |
| Payment for services rendered based on a fixed amount per period. | Salary pay |
| Selling price less cost. | Selling margin |
| A pricing strategy in which the company sets its initial selling price high in an attempt to appeal to those individuals who want to be the first to have the product and who are not concerned about price. | Skimming pricing |
| The opportunity cost of not having inventory on hand when needed. | Stockout cost |
| A pricing strategy where the company first determines the selling price of the product and then decides whether to enter the market. | Target pricing |
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