Figure 13-2 Above Represents the Six Steps in the Price-Setting

question 294

Multiple Choice

Figure 13-2 above represents the six steps in the price-setting process."A" represents the step at which a firm would

• A)raise initial capital.
• B)identify pricing objectives and constraints.
• C)scan competitors for prices of similar products or services.
• D)select the appropriate pricing formula.
• E)establish the price range.

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Definitions:

Conversion Costs

Costs in manufacturing that are directly related to converting raw materials into finished goods, primarily consisting of labor and overhead expenses.

Direct Material Costs

The cost of raw materials directly used in the production of goods.

Predetermined Rate

A rate established before the start of a project or period, often used in budgeting and costing, to assign overhead costs to specific activities.

First-In, First-Out

An accounting method for valuing inventory which assumes that the first items purchased are the first ones sold.