Which of the Following Statements About Geographical Adjustments to Price

question 245

Multiple Choice

Which of the following statements about geographical adjustments to price is most accurate?

• A)In FOB origin pricing,the seller selects the mode of transportation.
• B)In FOB with freight-allowed pricing,the seller must pay for all transportation costs.
• C)Multiple-zone pricing is sometimes referred to as "spider web" pricing.
• D)Basing point pricing seems to have been used in industries where freight expenses are a significant part of the total cost to the buyer.
• E)Geographical adjustments can be subject government regulation if the firm cannot supply objective data (lists of mountains,rivers,weather conditions,etc. )explaining why those adjustments need to be made.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders, based on a particular activity base.

Machine-Hours

A measure of production time used in cost accounting, representing the number of hours that machinery is in operation during a given period.

Overhead Applied

The allocation of indirect costs to specific cost objects, such as products or services, based on a predetermined overhead rate.

Direct Labor-Hours

The total hours worked directly on a product by employees.