The Ability-To-Bear Criterion Is Considered Superior When the Purpose of Cost

question 10

True/False

The ability-to-bear criterion is considered superior when the purpose of cost allocation is motivation.

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Definitions:

Target Cost

The estimated price for a product or service that is determined by subtracting a desired profit margin from the competitive market price.

Profit Margin

The ratio or percentage of profit to sales, reflecting the efficiency with which a company or business unit generates income relative to its revenue.

Competition-Based Method

A method of price setting based on the price offered by competitors.

Price-Setting Methods

Various strategies and techniques businesses use to determine the selling price of their goods or services.