Bradley Mfg

question 96

True/False

Bradley Mfg. changed its credit terms from 2/10 net 30 to 2/10 net 40. It is reasonable to assume
that the firm's ACP will be increased by this action.

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Definitions:

Absorption Costing

A costing method where all manufacturing costs, both fixed and variable, are allocated to products, thus "absorbing" them into the cost of goods sold.

Markup

The supplementary amount factored into the base price of goods to address fixed costs and earnings, influencing their final selling point.

Selling Price

The price a consumer disburses to obtain a product or service from a merchant.

Absorption Costing

An accounting method that includes all manufacturing costs—both variable and fixed—in the cost of goods sold, for product pricing.