Which of the Following Is Not an Advantage Cost-Plus Pricing

question 252

Multiple Choice

Which of the following is not an advantage cost-plus pricing?

• A) It leads to profit maximization.
• B) It is an easy method to implement if a firm produces multiple products and has overhead costs that are difficult to allocate to a particular good.
• C) It could lead to price stability if the industry is made up of identical firms all using the same method of pricing.
• D) It is easy to justify price increases when total costs of production increase.

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Definitions:

Process Cost Accounting System

An accounting system that accumulates costs for each process or department within a production environment.

Continuous Production

A manufacturing process where materials are produced without interruption around the clock.

Like Units

A term used in manufacturing or project management to describe items or resources that are comparable in function or use, often for the purpose of standardization or simplification.

Work in Process Inventory

Items that are partially completed in the manufacturing process but not yet ready for sale, recorded as current assets on a company's balance sheet.