Cost-Plus Pricing May Be a Reasonable Way to Determine Price

question 35

Multiple Choice

Cost-plus pricing may be a reasonable way to determine price when

• A)marginal cost and average fixed cost are roughly equal.
• B)marginal cost and average cost are about the same.
• C)marginal cost differs significantly from average cost.
• D)marginal cost is very low.

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Definitions:

Long-Term Liabilities

Debts or obligations of a business that are due for repayment in a period longer than one year.

Installment Note

A loan that requires regular payments, or installments, over a period, which covers both principal and interest.

Interest Expense

The cost incurred by an entity for borrowed funds, typically expressed as a yearly rate.

Installment Note

A debt instrument that requires a series of periodic payments consisting of both principal and interest.