Cost-Based Pricing

question 68

Multiple Choice

Cost-based pricing:

• A) Considers price elasticity of demand
• B) Is not commonly used
• C) Uses a mark-up percentage
• D) Is always based on variable cost

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Definitions:

LIFO

Last In, First Out, an inventory valuation method where the most recently acquired items are assumed to be sold first, affecting cost of goods sold and inventory value on the balance sheet.

Basic Accounting Equation

The fundamental equation representing the relationship between assets, liabilities, and owner's equity (Assets = Liabilities + Owner's Equity).

Owners' Equity

Represents the residual interest in the assets of a company after deducting liabilities, essentially the owner's claim against the company's assets.

Assets

Resources controlled by a business as a result of past events and from which future economic benefits are expected to flow to the entity.