The Practice of Accepting a Selling Price When There Is

question 7

Multiple Choice

The practice of accepting a selling price when there is excess capacity,as long as it exceeds variable cost is called:

• A)Contribution pricing.
• B)Differential pricing.
• C)Capacity pricing.
• D)Special pricing.

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Definitions:

Production

The process of creating goods or services by combining labor, materials, and technology.

Fixed Costs

Costs that do not change with the amount of goods or services produced over the short term.

Fixed Assets

Long-term tangible assets held for business use and not expected to be converted into cash in the upcoming fiscal year, such as buildings, machinery, and equipment.

Variable Costs

Costs that vary directly with the level of production or volume of services provided, including materials and labor, contrasting with fixed costs.