The Practice of a Firm Taking Its Cost and Attaching

question 49

Multiple Choice

The practice of a firm taking its cost and attaching a certain margin to arrive at the final price is known as

• A) cost-plus pricing.
• B) target costing.
• C) value-based pricing.
• D) price skimming.
• E) price penetration.

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Definitions:

Compounded Monthly

A method of calculating interest where interest earned is added to the principal monthly, so each subsequent interest calculation is on an increased amount.

Monthly Compounding

A method of calculating interest whereby the interest is calculated and added to the principal amount at the end of each month.

Compounded Monthly

A term used in finance to describe a situation where interest is added to the principal balance of an investment, loan, etc., on a monthly basis, and future interest is then earned on the resulting new balance.

Compounded Quarterly

The method of computing interest that includes the original amount plus the interest accrued over periods of three months.