Why Does Price Escalation Most Likely Occur in Exporting

question 40

Multiple Choice

Why does price escalation most likely occur in exporting?

• A)The WTO requires that prices increase.
• B)Companies rely on skimming price strategies.
• C)Greater distances and more intermediaries increase distribution costs.
• D)Uncertain currency value changes necessitate charging higher prices.

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Definitions:

Net Income

The net earnings of a business once all costs, taxes, and expenses have been deducted from its total income.

Inventory

The total amount of goods a company holds in stock, including raw materials, work-in-progress, and finished goods.

Variable Costing

An accounting method that only assigns variable costs to inventory, considering fixed costs as period expenses.

Absorption Costing

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