When Can Using Full Costs for Pricing Decisions Be Justified

question 135

Multiple Choice

When can using full costs for pricing decisions be justified?

• A)when a firm enters into a short term contractual relationship to supply a product.
• B)for development and production of customized products and contracts with the government.
• C)when managers initially set prices to cover development costs and then adjust to reflect market conditions.
• D)for development and production of standardized commercial products.

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Definitions:

Direct Departmental Expense

Costs that are exclusively associated with a specific department and essential for its operation.

Sales Personnel

Employees responsible for selling a company's products or services, often working on commission and interacting directly with clients.

Promotional Items

Products branded with a logo or slogan and distributed at little or no cost to promote a brand, corporate identity, or event.

Direct Expense

Costs that can be directly tied to the production of goods or services, such as raw materials and labor.