Which of the Following Is True of the Rate-Of-Return Approach

question 36

Multiple Choice

Which of the following is true of the rate-of-return approach to pricing?

• A)Rate-of-return pricing is commonly used by manufacturers.
• B)Rate-of-return pricing is a psychological pricing strategy.
• C)Rate-of-return pricing does not involve circular reasoning.
• D)Rate-of-return pricing places maximum emphasis on estimating sales volume.

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Definitions:

Stockholders' Equity

The remaining interest in a corporation's assets after all liabilities are subtracted, which signifies ownership.

Accounts Receivable

Accounts receivable represents money owed to a business by its customers for goods or services delivered but not yet paid for.

Business Activities

Various actions undertaken by a company to operate and manage its business, including operating, investing, and financing activities.

Operating

Pertains to the day-to-day activities involved in managing a business, including production, sales, and administration.