Costs Are Frequently Used as a Basis for Price Determination

question 28

True/False

Costs are frequently used as a basis for price determination largely because they are easily measured and provide a floor under which prices cannot go in the long term.

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Definitions:

Traceable Fixed Expense

A fixed cost that can be directly linked to a specific business segment, product, or service.

Net Operating Income

The income earned by a business through its core operations, not including taxes and interest expenses.

Unit Sales

This term refers to the quantity of individual items sold or expected to be sold.

Price Increase

is the rise in the selling price of goods or services, often due to factors like inflation, increased production costs, or higher demand.