A Common Pricing Mistake Entrepreneurs Make Is Lowering Prices Because

question 19

Multiple Choice

A common pricing mistake entrepreneurs make is lowering prices because they fail to recognize the ________.

• A)extra value, convenience, service, and quality they offer their customers
• B)advantages they have due to their lower cost structure
• C)complexities that larger competitors have to face
• D)driving need that all customers have to find the lowest price possible

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Definitions:

Overapplied Overhead

A situation where the amount of overhead allocated to products or services exceeds the actual overhead expenses incurred.

Applied Overhead

The process of assigning a portion of estimated overhead cost to specific production jobs or departments based on a predetermined rate.

Actual Overhead

includes the real, as incurred, indirect costs associated with manufacturing a product or providing a service, including utilities and rent.

Cost Allocation

The process of assigning indirect cost to a cost object, such as a job.