Which of the Following Is Not True When Determining the Selling

question 115

Multiple Choice

Which of the following is not true when determining the selling price for a product?

• A) Absorption costing should be used to determine routine pricing which include both fixed and variable costs.
• B) As long as the selling price is set above the variable costs, the company will make a profit in short run.
• C) Variable costing is effective when determining short run decisions, but absorption costing is only used for long-term pricing policies.
• D) Both variable and absorption pricing plans should be considered, to include several pricing alternatives.

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Definitions:

Losses

Financial reductions or negative outcomes typically resulting from expenses surpassing revenues or due to the decrease in value of an asset.

Limited Liability Company

A corporate configuration that unites the straightforward tax treatment of sole proprietorships or partnerships with the limited personal liability characteristic of corporations.

Unincorporated Business Association

A group engaged in business without the formalities and legal protections of incorporation, such as partnerships or sole proprietorships.

Limited Liability

Limited Liability is a legal structure that limits an owner's or shareholder's personal liability for a company's debts and obligations.