A Toothbrush That Costs Ten Cents to Manufacture May Cost

question 72

Multiple Choice

A toothbrush that costs ten cents to manufacture may cost a consumer $3.00 to buy. According to critics, this is an example of ________.

• A) deceptive advertising
• B) redlining
• C) excessive markup
• D) high-pressure selling
• E) shoddy manufacturing

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Definitions:

Recoverable Amount

The recoverable amount is the greater value between an asset's net selling price and its value in use, indicating the potential value that can be recovered from an asset over time.

Impairment Loss

A reduction in the recoverable amount of a fixed asset or goodwill below its book value, recognized as an expense in the income statement.

Profit Margin

The percentage of revenue that remains after all operating expenses, taxes, and costs have been deducted from total sales.

Net Income

The final amount a company keeps as profit after deducting all costs and taxes from its gross revenue.