For Pricing Decisions, Full Product Costs

question 41

Multiple Choice

For pricing decisions, full product costs:

• A)include all costs that are traceable to the product
• B)include all manufacturing and selling costs
• C)include all direct costs plus an appropriate allocation of the indirect costs of all business functions
• D)allow for the highest possible product prices

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Definitions:

Breakeven Analysis

Breakeven analysis is a financial evaluation to determine the point at which a business, product, or service becomes profitable, balancing costs with revenue.

NPV

Net Present Value, a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time, used to assess the profitability of an investment.

ROI

Short for Return on Investment, a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of several investments.

Shadow IT

Shadow IT refers to IT systems and solutions built and used inside organizations without explicit organizational approval.