Many automobile dealers have an operating pattern similar to that of City Motors. Each month, City initially

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Many automobile dealers have an operating pattern similar to that of City Motors. Each month, City initially aims at a unit volume quota that approximates a break-even point. Until the break-even point is reached, City has a policy of relatively lofty pricing, whereby the “minimum deal must contain a sufficiently high markup to ensure a contribution to profit of no less than $400. After the break-even point is attained, City tends to quote lower prices for the rest of the month. 

What is your opinion of this policy? As a prospective customer, how would you react to this policy?

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Management Accounting

ISBN: 978-0132570848

6th Canadian edition

Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu

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