What Is the Term for Advertising a Product at a Very

question 8

Multiple Choice

What is the term for advertising a product at a very low price when you have an insufficient supply to meet expected demand?

• A) falsity of advertising
• B) bait and switch
• C) unfair practices
• D) misleading advertising

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Definitions:

Variable Costing

A method of costing that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a unit of product.

Absorption Costing

An accounting method that includes all manufacturing costs - direct labor, direct materials, and overhead - in the cost of a product.

Net Operating Income

A company's revenue minus its operating expenses, not including taxes and interest.

Fixed Manufacturing Overhead

The total of all production costs that do not change with the level of production output, such as salaries of managers, rent, and property taxes.