Market-Based Pricing

question 38

Multiple Choice

Market-based pricing:

• A) Uses a traditional mark-up
• B) Calculates price based on total cost
• C) Considers demand and competitors' prices
• D) Considers current costs and future costs in setting prices

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Definitions:

Salvage Value

The estimated resale value of an asset at the end of its useful life; it is used in calculating depreciation expense.

Depreciation

The orderly apportionment of a physical asset's cost throughout its useful life.

Useful Life

The estimated period an asset is expected to be used before it is deemed no longer useful for operations.

Units-Of-Activity

A depreciation method that allocates cost based on the actual usage, work performed, or units produced by an asset.