Which of the Following Statements Regarding Cost-Oriented Approaches Is Most

question 323

Multiple Choice

Which of the following statements regarding cost-oriented approaches is most accurate?

• A) These methods focus on the demand side of the pricing problem.
• B) These methods focus on production and marketing expenses.
• C) Target return on investment is an example of a cost-oriented method.
• D) Experience curve pricing is simple to use because costs predictably decrease by 25 percent with each doubling of production.
• E) Cost-oriented approaches are subcategories of competition-oriented methods.

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Definitions:

Direct Method

A cost allocation method that assigns service department costs directly to producing departments without any intermediate allocations.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid.

Operating Activities

Business activities that relate directly to the production, sale, and delivery of a company's products or services, generating revenue.

Cash Dividends

Payments made by a corporation to its shareholders out of its profits or reserves in the form of cash.