Corporate-Sustaining Costs Should Be Allocated To

question 167

Multiple Choice

Corporate-sustaining costs should be allocated to:

• A)motivate changes in customer behavior
• B)evaluate distribution-channel managers
• C)determine the selling price that will cover all costs
• D)identify the most profitable customers

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Definitions:

Consumer Surplus

The gap between what consumers are prepared to pay for a product or service and what they end up spending.

Market Price

The current value at which a good or service is bought or sold in the market, typically influenced by the forces of supply and demand.

Maximum Price

A price ceiling, often set by regulatory bodies, above which a particular good or service cannot be sold, intended to protect consumers.

Consumer Surplus

The divergence between the price customers are willing to pay and the price they actually pay for a good or service.