_____ Is Most Often Used to Describe the Pricing of Services

question 55

Multiple Choice

_____ is most often used to describe the pricing of services that are nonroutine and difficult to "cost" in advance of their completion.

• A) Target cost pricing
• B) Rate-of-return pricing
• C) Bundle pricing
• D) Cost-plus pricing

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Definitions:

Opportunity Rate

The return a company foregoes by investing capital in one project over a potentially more profitable alternative.

Lockbox System

A service provided by banks to companies for the receipt of payment from customers, involving the direct sending of payments to a location accessible by the bank, which then deposits the funds into the company's account.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Money Market Securities

Short-term debt instruments, commonly including treasury bills, commercial paper, and certificates of deposit, known for their liquidity and low-risk profile.