Which of These Statements Regarding Pricing Constraints Is Most Accurate

question 148

Multiple Choice

Which of these statements regarding pricing constraints is most accurate?

• A) Generally, the greater the demand for a product, the higher the price that can be set.
• B) At the corporate level, when setting pricing constraints, a firm must disregard current conditions in the marketplace because they are too temporal for long-term planning.
• C) Pricing constraints must always be set, but they are rarely enforced.
• D) It is possible to create pricing constraints with the greatest range possible in order to anticipate any and all changes in the marketing environment.
• E) Even if a firm is trying to satisfy its obligations to its customers and society in general, it should ignore setting pricing constraints.

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Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, based on the estimated overhead costs and activity levels, used to allocate overhead costs to products.

Direct Materials Cost

The cost of raw materials that are directly used in the production of goods, which is easily traceable to the finished product.

Direct Labor Wage Rate

The hourly wage rate paid to workers directly involved in the production of goods or services.

Predetermined Overhead Rate

A calculated rate used to assign overhead costs to products or services, based on estimated overhead and estimated activity base.