Question

1. When setting long-term sales prices for products, the sales price must cover all costs, including...

1. When setting long-term sales prices for products, the sales price must cover all costs, including fixed costs.

True or False

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The answer is True.

When we use absorption costing method, the fixed production overhead are charged to products and are included in product costs. Consequently the closing stocks are valued on total cost (including fixed overhead) basis.

Absorption Pricing can be defined as the method by which a company sets its long-term sale prices for products. Therefore the price would include variable cost as well as proportionate amount of fixed costs. A business would maintain the amount of profit it earns if it uses this pricing technique.

Therefore it can be concluded that when setting long-term sales prices for products, the sales price must cover all costs, including fixed costs is Correct.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1) Price searchers can set the prices of their products. True or False: The ability to...
1) Price searchers can set the prices of their products. True or False: The ability to set price means that price searchers will always charge the highest possible price for their products. A) True B) False 2) True or False: Although price searchers can set their prices, the prices they can set are still affected by market conditions. A) True B) False Suppose firms in a competitive price-searcher market with low barriers to entry are earning an economic profit. Firms...
Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y7 1 Sales $424,000.00...
Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y7 1 Sales $424,000.00 2 Variable costs: 3 Manufacturing expense $233,200.00 4 Selling expense 21,200.00 5 Administrative expense 63,600.00 318,000.00 6 Contribution margin $106,000.00 7 Fixed Costs: 8 Manufacturing expense $5,000.00 9 Selling expense 4,000.00 10 Administrative expense 33,400.00 42,400.00 11 Income from operations $63,600.00 Income Statement - Biblio Files Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y7 1 Sales $424,000.00 2...
Doran Products had costs of $950,000 when sales equaled 55,000 units. When sales increased to 85,000...
Doran Products had costs of $950,000 when sales equaled 55,000 units. When sales increased to 85,000 units, total costs increased to $1,400,000. The selling price is $21 per unit. Required: (a.) Determine the fixed and variable portions of costs. (b.) Prepare a contribution margin income statement for a month with sales of 70,000 units.
As long as sales revenues exceed all costs over part of an accounting period, a firm...
As long as sales revenues exceed all costs over part of an accounting period, a firm will avoid any cash shortage. true or false
When a hedger expects a price fall in the prices of the underlying asset? 1.a long...
When a hedger expects a price fall in the prices of the underlying asset? 1.a long hedge can be used to hedge the prices of underlying asset 2.a short hedge can be used to hedge the prices of underlying asset 3.all of the above 4.non of the above
1. Companies that sell products whose prices are set by market forces are called price setters....
1. Companies that sell products whose prices are set by market forces are called price setters. price givers. price leaders. price takers. 2. Bonita Industries has gathered the following information concerning one model of shoe: Variable manufacturing costs $40000 Variable selling and administrative costs $20000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1600000 ROI 30% Planned production and sales 5000 pairs What is the total cost per pair of shoes? $68 $40 $158 $96
16. True and false Year-end #1: Sales 200 with Cash 100 = + long-term debt 100...
16. True and false Year-end #1: Sales 200 with Cash 100 = + long-term debt 100 + capital stock 100 + opening retained earnings 0 + net income 50 + accounts payable 100 – accounts receivable 100 – inventory 50 - fixed assets 100. Year-end #2: Sales 400 with Cash 100 = + long-term debt 200 + capital stock 100 + opening retained earnings 50 + net income 50 + accounts payable 200 – accounts receivable 100 – inventory 100...
ncome Statement - Cover-to-Cover Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31,...
ncome Statement - Cover-to-Cover Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 Sales $404,000 Variable costs:   Manufacturing expense $242,400   Selling expense 20,200   Administrative expense 60,600 (323,200)   Contribution margin $80,800 Fixed costs:   Manufacturing expense $5,000   Selling expense 4,000   Administrative expense 11,200 (20,200) Operating income $60,600 Income Statement - Biblio Files Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 Sales $404,000 Variable costs:   Manufacturing expense $161,600   Selling expense 16,160   Administrative expense...
When operations are interrupted or cut back, committed fixed costs are cut in the short term...
When operations are interrupted or cut back, committed fixed costs are cut in the short term because the costs of restoring them later are likely to be far less than the short-run savings that are realized . IS IT TRUE OR FALSE
5. Operating leases are long-term or noncancelable leases in which the lessor transfers substantially all the...
5. Operating leases are long-term or noncancelable leases in which the lessor transfers substantially all the risks and rewards of ownership to the lessee. True or False 7. Price-earnings ratio is computed by dividing annual dividends by average market value per share. True or False
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT