Target Pricing

question 76

Multiple Choice

Target pricing:

• A)estimates are based on customers' perceived value of the product.
• B)is used for short-term pricing decisions.
• C)is one form of cost-based pricing.
• D)refers to the fact that relevant costs are all variable costs.

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Definitions:

Retail Inventory Method

An accounting procedure for estimating inventory value by applying a percentage cost-to-retail price.

Inventory Value

The total cost or market value of all items held in inventory, including raw materials, work-in-progress, and finished goods.

FIFO Cost Flow Assumption

An inventory valuation method where goods purchased first are the first sold, assuming costs are charged in the order in which they are incurred.

LIFO Cost Flow Assumption

An inventory valuation method that assumes the last items added to inventory are the first sold, affecting the cost of goods sold and ending inventory value.