_____ Pricing Is a Practical Approach to Pricing When a Company

question 47

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) Premium

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Definitions:

Projected Benefit Obligation

An actuarial calculation of the present value of future pension benefits earned to date by employees, based on expected salary increases.

Vested Benefits

Employee benefits (such as pension plans) that are fully entitled to the employee, not contingent on further employment.

Actuarial Assumptions

The estimates and hypotheses used by actuaries to calculate insurance risks and liabilities, including rates of mortality, morbidity, and interest.

Service Cost

The actuarial present value of benefits earned by employees during a given period, included in the calculation of pension expense.