Which of the Following Best Explains Why Market Prices Are

question 4

Multiple Choice

Which of the following best explains why market prices are useful to a financial manager when performing a cost-benefit analysis?

• A)They can be evaluated to determine whether the market in which the manager exchanges goods and services offers true value.
• B)They can be used to convert different services and commodities into equivalent cash values which can be compared.
• C)They allow all commodities and services to be assigned a fixed and unchanging value.
• D)They can be used to determine how much an asset can be sold for.

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Definitions:

Service Costing System

An accounting method used for establishing the cost associated with providing a service.

Complexity

Refers to the degree of intricacy, difficulty, or multifaceted nature of a task, system, or situation, which can affect manageability and understanding.

Underapplied/Overapplied Overhead

A situation in cost accounting where the overhead costs applied to products or services are less than (underapplied) or more than (overapplied) the actual overhead costs incurred.

Service Industries

Sectors of the economy that provide intangible products, such as healthcare, education, and financial services, to consumers and businesses.