IDIS 424 Incremental Quantity Disocunt Part 1

Which statement best describes an incremental quantity discount?

A. The discounted price applies to all units once the breakpoint is reached
B. The price reduction applies only to units purchased above a quantity tier
C. The lowest price always applies to the entire order
D. Discounts apply only to shipping costs

B. The price reduction applies only to units purchased above a quantity tier

In incremental quantity discounts, earlier units keep their original price even when higher tiers are reached.

True
False

True

A supplier offers the following incremental pricing:

First 5 units → $1.50 each
Additional units → $1.00 each

If a buyer orders 10 units, what is the total purchase cost?

A. $12.50
B. $15.00
C. $13.50
D. $10.00

A. $12.50

Using the same pricing structure above, what is the average unit price when ordering 10 units?

A. $1.25
B. $1.20
C. $1.10
D. $1.15

A. $1.25

In incremental discounts, the average unit price generally decreases as order quantity increases.

True
False

True

A company applies the following incremental pricing:

First 499 bottles → $0.30
Next bottles up to 999 → $0.25

What is the cost of ordering 600 bottles?

A. $174.75
B. $165.25
C. $180.00
D. $150.00

A. $174.75

Using the pricing schedule above, what is the average unit price when ordering 600 bottles?

A. $0.29
B. $0.275
C. $0.30
D. $0.26

A. $0.29

Breakpoints in incremental quantity discount models indicate where price changes occur.

True
False

True

A supplier offers the following incremental pricing:

First 499 → $0.30
Next 500 → $0.25
Remaining → $0.20

If a firm orders 1200 units, how many units receive the $0.20 price?

A. 201
B. 200
C. 500
D. 100

A. 201

Using the same pricing schedule, what is the cost of the first 499 units?

A. $150.00
B. $124.75
C. $149.70
D. $130.00

C. $149.70

Incremental discounts reduce the price of all units purchased once the quantity breakpoint is reached.

True
False

False

Which of the following best describes the average unit price in incremental discounts?

A. Total cost divided by quantity ordered
B. EOQ divided by holding cost
C. Unit price multiplied by demand
D. Ordering cost divided by order size

A. Total cost divided by quantity ordered

A buyer orders 1100 bottles under the pricing schedule:

First 499 → $0.30
Next 500 → $0.25
Remaining → $0.20

How many bottles are priced at $0.25?

A. 500
B. 601
C. 499
D. 400

A. 500

Incremental quantity discounts typically reduce the average unit cost gradually rather than suddenly.

True
False

True

Which type of discount applies the same reduced price to every unit purchased once the breakpoint is reached?

A. Incremental discount
B. All-units discount
C. One-time discount
D. Seasonal discount

B. All-units discount

If the total purchase cost for 1000 units is $275, what is the average unit price?

A. $0.30
B. $0.25
C. $0.275
D. $0.20

C. $0.275

In incremental discount problems, determining the variable cost for each price interval is necessary.

True
False

True

A supplier offers incremental pricing:

First 200 units → $5
Additional units → $4

If a buyer orders 250 units, what is the total cost?

A. $1050
B. $1100
C. $1200
D. $1000

C. $1200

Under incremental discounts, what happens to the marginal cost of additional units as quantity increases?

A. It increases
B. It decreases at price tiers
C. It remains constant
D. It becomes zero

B. It decreases at price tiers

Incremental discounts often allow sellers to encourage larger orders while maintaining higher prices on early units.

True
False

True

A supplier offers incremental pricing:

First 100 units → $5
Next units → $4

What is the total cost of ordering 120 units?

A. $560
B. $600
C. $520
D. $580

D. $580

In incremental discounts, the marginal price of additional units can decrease at each price tier.

True
False

True

A supplier offers the following incremental pricing:

First 200 units → $10
Next 200 units → $8

If a buyer orders 300 units, how many units are priced at $8?

A. 200
B. 100
C. 300
D. 150

B. 100

Using the pricing structure above, what is the total cost of ordering 300 units?

A. $2600
B. $2800
C. $3000
D. $2400

B. $2800

Incremental discounts generally produce a higher total cost for small orders compared to large orders.

True
False

True

A company orders 700 units under the incremental pricing:

First 500 units → $2
Remaining units → $1.50

What is the cost of the additional 200 units?

A. $300
B. $250
C. $400
D. $350

A. $300

Using the same pricing schedule, what is the total purchase cost for 700 units?

A. $1300
B. $1400
C. $1500
D. $1200

B. $1400

Incremental discounts lower the cost of earlier units when the order reaches a higher price tier.

True
False

False

A buyer orders 900 units under the incremental pricing:

First 400 → $3
Next 300 → $2.50
Remaining → $2

How many units receive the $2 price?

A. 200
B. 300
C. 400
D. 500

A. 200

Using the same pricing schedule above, what is the cost of the first 400 units?

A. $1200
B. $1000
C. $1100
D. $900

A. $1200

Incremental discounts are typically used to gradually reduce the average price as order quantities increase.

True
False

True

A buyer orders 1000 units under the incremental pricing:

First 400 → $3
Next 300 → $2.50
Remaining → $2

How many units are priced at $2.50?

A. 400
B. 300
C. 200
D. 100

B. 300

Using the same pricing schedule, what is the cost of the last 300 units in a 1000-unit order?

A. $750
B. $600
C. $900
D. $700

B. $600

Incremental quantity discounts always result in a lower total cost than all-units discounts.

True
False

False

A supplier offers incremental pricing:

First 50 units → $20
Additional units → $15

What is the cost of ordering 60 units?

A. $1150
B. $1100
C. $1050
D. $1200

A. $1150

Using the same pricing structure, what is the average unit price for 60 units?

A. $18.33
B. $17.50
C. $19.00
D. $16.67

B. $17.50

Incremental discounts require calculating total purchase cost by summing costs across price intervals.

True
False

True

A buyer orders 750 units under the pricing:

First 500 → $1
Next units → $0.80

What is the cost of the remaining 250 units?

A. $180
B. $200
C. $220
D. $250

B. $200

Using the same pricing schedule above, what is the total purchase cost for 750 units?

A. $700
B. $720
C. $750
D. $680

A. $700

When solving incremental discount problems, each price tier must be evaluated separately.

True
False

True