If MAKO Sets the Price for Its Sunglasses at $240

question 42

Multiple Choice

If MAKO sets the price for its sunglasses at $240, it is using psychological pricing to convey:

• A)thrift.
• B)cost cutting.
• C)value.
• D)prestige.
• E)availability.

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Definitions:

Predetermined Overhead Rate

A rate calculated by dividing estimated overhead costs by an allocation base, used to allocate overhead to products or services.

Direct Labour-Hours

The amount of time dedicated by employees for the manufacture of products, directly impacting production costs and efficiency.

Overhead Applied

Overhead applied refers to the allocation of overhead costs to specific jobs or production units based on a predetermined rate or basis.

Job-order Costing System

A costing method that assigns costs to specific batches or lots of products, often tailor-made for customers.