Customers Are Likely to Be Less Price Sensitive ______

question 150

Multiple Choice

Customers are likely to be less price sensitive ______.

• A) the greater the total expenditure
• B) the greater their share of the cost
• C) the greater the significance of the end benefit
• D) the easier it is to compare prices
• E) the greater the availability of the substitutes

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Definitions:

Absorption Costing

A method of product costing that incorporates all manufacturing costs, including both fixed and variable costs, in the price of a product.

Variable Costing

An accounting method that charges only variable costs to cost of goods sold and reports fixed costs separately as period costs.

Fixed Manufacturing Overhead

Costs associated with production that do not vary with the level of output, such as salaries of managers and rent for factory buildings.

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overhead—in the cost of a product.