Freight-Absorption Pricing Basically Amounts to Cutting List Price on Sales

question 152

True/False

Freight-absorption pricing basically amounts to cutting list price on sales to distant customers.

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Definitions:

Service Departments

Units within an organization that support other departments but do not directly contribute to profit, such as human resources and maintenance.

Investment Turnover

A measure of a company's ability to use its assets to generate sales or revenue, indicating how efficiently the investments are being used.

Activity Base

A measure used as a basis for allocating costs in activity-based costing, relating costs to the activities that drive the need for those costs.

Revenue

The total amount of income generated by the sale of goods or services related to a company's main operations.