Cindy Discovers That When She Goes to the Beach, She

question 11

Multiple Choice

Cindy discovers that when she goes to the beach, she does not have to bring her radio. She can put her blanket near someone who has a radio and listen all day (without having to carry her radio, get sand in her speakers, or buy new batteries) . This is an example of:

• A) private property abuse.
• B) external costs.
• C) a negative externality.
• D) a positive externality.

Distinguish between different cost structures and their influence on pricing strategies.

Recognize legal, political, and environmental considerations in pricing decisions.

Apply cost-plus pricing formulas to determine product prices.

Understand the application and implications of the profit maximising model.

---

Definitions:

Administrative Expenses

Costs related to the general operation of a business, such as salaries of executive personnel, accounting, and human resources.

Cash Disbursements

Represents the money flowing out of a company to cover expenses, including payments to suppliers and employees.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or job orders, calculated before the year begins based on estimated costs and activity levels.

Direct Labor-hour

A measure of the work time involved in producing goods, usually expressed in hours, directly tied to the labor cost of manufacturing.