​Janice Is Starting a New Business and Is Confused About

question 178

Multiple Choice

​Janice is starting a new business and is confused about how to determine the price to set for her product. She comes to you for advice and you tell her, correctly, that the two factors that determine the price at which a product will sell are

• A)​the market and the awareness that costs and expected sales can be used only to establish a price floor.
• B)​the market and status-quo.
• C)​the cost of production and maximum price that can be charged.
• D)​the competition price point and product demand.

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Definitions:

Capacity Analysis

The evaluation of a company's ability to meet its production goals with the available resources and facilities.

Time-Driven Activity-Based Costing

A costing method that estimates the costs of resources used in business activities, based on the time those activities take and the rate at which resources are consumed.

Customer Service Department

A functional unit within a business that handles customer inquiries, complaints, and facilitates after-sales support.

Capacity Analysis

The evaluation of a business's ability to meet current and future production demands with its existing resources.