Which of the Following Is Not True When Determining the Selling

question 36

Multiple Choice

Which of the following is not true when determining the selling price for a product?

• A)Absorption costing should be used to determine routine pricing which includes both fixed and variable costs.
• B)As long as the selling price is set above the variable costs, the company will make a profit in the short run.
• C)Variable costing is effective when determining short-run decisions, but absorption costing is only used for long-term pricing policies.
• D)Both variable and absorption pricing plans should be considered, to include several pricing alternatives.

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Definitions:

Noncurrent Assets

Assets expected to provide economic benefits beyond one year or the normal operating cycle of the business, including property, plant, and equipment, as well as intangible assets.

Unrealized Gains

Increases in the value of an asset that has not been sold yet, thus not resulting in actual cash flow or taxable income until the asset is sold.

Trading Securities

Financial instruments such as stocks or bonds that a company holds with the intent of selling them in the short term to profit from price fluctuations.

Broker Commission

A fee paid to a broker for their services, usually a percentage of the transaction value.