Freight Absorption Pricing

question 261

Multiple Choice

Freight absorption pricing:

• A) amounts to cutting list price to appeal to new geographic markets.
• B) forces all buyers to pay higher shipping costs.
• C) tends to restrict firms from competing in distant markets.
• D) tends to decrease competition.
• E) None of these alternatives is correct.

Understand and describe the principles of internal control systems and their importance in business operations.

Identify and explain various types of internal controls and their specific applications within cash management.

Explain the limitations of internal control systems, including human error and fraud.

Describe the role and significance of cash and cash equivalents in financial reporting.

---

Definitions:

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionally weighted, assessing investment risk and strategy.

Capital Structure

The particular combination of debt and equity used by a firm to finance its overall operations and growth.

Break Even

The point at which total costs and total revenue are equal, meaning there is no net loss or gain.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.