_____ Pricing Is a Practical Approach to Pricing When a Company

question 78

Multiple Choice

_____ pricing is a practical approach to pricing when a company has high fixed costs and unused production capacity.

• A) Full-cost
• B) Cost-plus
• C) Marginal-cost
• D) Demand-based
• E) Supply-based

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Definitions:

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected (or standard) cost of those materials.

Variable Overhead

Costs that vary with production volume but are not directly tied to specific production units, such as utilities for the manufacturing plant.

Direct Labor-Hours

The total hours worked by employees that are directly involved in the manufacturing process or providing a service, used in costing and operational efficiency analyses.

Direct Material

Primary raw materials directly incorporated into a finished product, an essential component in calculating the cost of goods sold.