6-32: Pricing, customer profitability, managing customer relationships Read the Wall Street Journal article Survival Strategies: After Cost Cutting, Companies Turn toward Price Increases by Timothy Aeppel (September 18, 2002, p. A1). The article reports an all-out search for new ways to charge more money without raising prices.

(a) How did Jergens, Inc., use and activity-based costing approach to justify the price for an order of odd-size metal locating fasteners?

(b) What issues arose in Goodyear Tire & Rubbers pricing to distributors? What was Goodyears response?

(c) What was the outcome of Emerson Electrics decision to depart from cost-based pricing? How can a product costing system contribute to undercosting a low-volume or customized product?

(d) How did Wildeck influence customers to purchase products and services that are more profitable to Wildeck? How did Wildeck respond to a competitors lower priced storage-rack protector? What role should a cost system plan in such decisions?

(e) Why was Union Pacific not concerning if it lost its less profitable customers? Will dropping unprofitable customers always lead to an immediate increase in profit?