Freight-Absorption Pricing Is Used for ________ and ________

question 109

Multiple Choice

Freight-absorption pricing is used for ________ and ________.

• A) market penetration; higher profit margins
• B) holding on to increasingly competitive markets; higher profit margins
• C) market penetration; holding on to increasingly competitive markets
• D) generating temporary higher profits; discouraging competitors
• E) services; installations

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Definitions:

Direct Labor

The labor costs directly associated with the manufacture of specific goods or services, which can be easily traced to a product.

Factory Overhead

Factory Overhead includes all indirect costs associated with the manufacturing process, such as utilities, maintenance, and manager salaries, not directly tied to production output.

Process Manufacturing

A production method used in industries such as chemical, food, and pharmaceuticals, where goods are produced in continuous, batch processes rather than discrete units.

Unique Items

Products or goods that are distinct in characteristics or are produced in small quantities, making them rare or uncommon.