Which of the Following Would Be an Economic Explanation of How

question 64

Multiple Choice

Which of the following would be an economic explanation of how "99¢ pricing" was developed?

• A) It was a sales gimmick that sellers used to try to fool their customers.
• B) It was encouraged by a penny newspaper to increase the number of pennies in circulation.
• C) It was a scheme to let firms advertise that their prices were under some round dollar figure.
• D) It was a way of ensuring that sales were recorded on cash registers,thus reducing employee theft.

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Definitions:

Predetermined Overhead Rate

The rate used to allocate manufacturing overhead to individual products or job orders, calculated before the period begins based on estimated costs and activity levels.

Machine-Hours

A measure of production time, indicating the total hours that machines have been operating during a given period.

Fixed Manufacturing Overhead

The total of all costs that remain constant regardless of the level of production within a certain range.

Machining Department

A division within a manufacturing facility where machining processes such as cutting, drilling, or shaping are performed.