When a Manager Sets Prices for All Items in a Multiple

question 31

Multiple Choice

When a manager sets prices for all items in a multiple products line to cover the total cost and to produce a profit for the complete line - not necessarily for each item, it is called:

• A)price lining.
• B)customary pricing.
• C)line item pricing.
• D)product-line pricing.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries for management.

Direct Labor-Hours

Direct labor-hours are the total hours worked by employees directly involved in manufacturing a product or delivering a service.

Standard

A benchmark or a set level of performance or achievement that is established for a process or product.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated, based on the efficiency of operations.