A Negative Aspect of Selecting Unit Volume as a Pricing

question 200

Multiple Choice

A negative aspect of selecting unit volume as a pricing objective is that

• A) production often cannot keep up with demand.
• B) there are increased carrying costs with extensive inventories.
• C) if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits.
• D) it can create competition between divisions within the organization itself, causing conflicts over the allocation of resources.
• E) it always positively correlates with a sales revenue objective.

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Definitions:

Gain

A financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Indirect Method

A method used in cash flow statements to adjust net income for the changes in non-cash accounts to calculate the cash from operating activities.

Depreciation Expense

Depreciation Expense is an accounting method used to allocate the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over a specific period.

Amortization

The process of gradually writing off the initial cost of an asset over a period, often referring to intangible assets.