If a Service Firm Sets a Specific Price for Each

question 197

Multiple Choice

If a service firm sets a specific price for each possible job-rather than setting a price which applies for all potential customers-it is most likely using:

• A) product-bundle pricing.
• B) a one-price policy.
• C) price lining.
• D) average-cost pricing.
• E) bid pricing.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs — direct materials, direct labor, and both variable and fixed overhead — in the cost of a product.

Variable Costing

A costing method that includes only variable production costs in product cost calculations, used for internal decision-making.

Net Income

The excess of all revenues and gains over all expenses and losses for a specific period of time.

Production

The process of creating goods and services from various resources.