Holding All Other Things Constant, an Increase in How Sensitive

question 80

Multiple Choice

Holding all other things constant, an increase in how sensitive customers are to price would affect:

• A)the markup under the absorption costing approach to cost-plus pricing.
• B)the markup used to compute the profit-maximizing price.
• C)both the markup under the absorption costing approach to cost-plus pricing and the markup used to compute profit-maximizing price.
• D)neither the markup under the absorption costing approach to cost-plus pricing nor the markup used to compute profit-maximizing price.

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Definitions:

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available for sale.

Equivalent Units Of Production

A concept in cost accounting used to allocate costs to partially completed goods, based on the amount of work done on them.

Equivalent Units Of Production

A calculation used in the production process to equate the amount of work done on partially finished goods to the quantity of completed goods.

Process Costing

A method of costing used to ascertain the cost of a product at each process or stage of manufacture.