Chapter 10-Relation of Cost to Price, Meaning of Cost

What does cost of revenue primarily include?

Which factor does not justify a seller’s insistence on a specific price based on costs?

Which of the following is NOT typically included in the cost of services?

What question arises regarding the costs of different manufacturers?

Which statement accurately reflects the relationship between cost and market price?

What does 'fair price' signify for a supplier?

What must the supplier's total costs include for sustainability?

Which of the following describes a 'continuous supply'?

Why might the prices set by monopolists be considered fair?

What influences the determination of a 'fair price'?

Which statement is true regarding fair prices between different sellers?

What role does historical experience play in pricing decisions?

What challenge do supply managers face regarding fair prices?

What is described as a price that may still be considered fair despite being set by a monopolist?

What can result when suppliers do not cover total costs and receive a profit?

Which cost is typically classified as a direct cost?

What is the relationship between direct costs and variable costs typically considered?

Which of the following is an example of an indirect cost?

What is a potential disadvantage of using average rates for overhead costs?

What type of costs remain constant regardless of production volume?

What can semivariable costs be described as?

How is factory overhead often historically determined?

Which of the following best describes direct labor costs?

What component is not typically included in the total manufacturing cost buildup?

What might cause a prevailing market price to be considered unfair?

In what scenario might a supplier choose to accept reduced costs?

What type of costs could be included when calculating selling, general, and administrative expenses?

What is a common challenge faced when determining the actual price of a service?

When calculating costs, which element is based on an estimation of production volume?

If a company's costs increase in direct proportion to the increase in sales of services, which type of expense is primarily involved?

What is the critical question that arises after accepting the definition of cost provided in the text?

Given that market price is not determined by cost, what should a seller primarily focus on when setting prices?

If a seller is not entitled to a price that yields profit merely because they're in business, what other justifications for a price are deemed acceptable?

What is the primary implication if all businesses were automatically entitled to a profit, regardless of their costs?

What is required for a seller to be entitled to get a price that even covers their costs?

If a price is based on average cost of raw materials, what aspect of those raw material costs is considered?

What is a key distinction between the cost of services and the cost of general goods?

Why should a seller not assume they are entitled to a price that yields a profit, regardless of costs, quality, or service?

What is the primary goal a supply manager should aim for when determining a 'fair price'?

What is the key difference between 'direct costs' and a 'fair price' of an item?

What is the significant difference between a 'fair price' and the prevailing market price?

Why is it important that a supply manager understands a supplier's cost structure when determining a 'fair price'?

How might a 'fair price' differ between two suppliers providing similar products?

What is the long term risk of only paying direct costs of goods regularly?

What is the potential issue with a 'prevailing price' that is unusually high?

What factor is the most critical when defining a fair price for a specific item?

Why might some businesses choose to use 'average rates' for overhead instead of precise allocated costs?

How does prior experience help in setting a 'fair price' in supply management?

If a company uses the last price paid in the immediately prior fiscal period to calculate direct material costs, what potential issue might arise when compared to using a weighted average?

When categorizing costs, if a company operating at full capacity increases its production by 10%, which cost is least likely to show a directly proportional increase?

A company is assessing its current overhead allocation and realizes they have been allocating overhead based on a historical direct labor rate, despite the fact that labor is no longer the largest cost element. What's the most significant accounting and financial implication of continuing to use this method?

Which of the following scenarios most accurately reflects a situation where a 'black' or 'grey' market price arises, potentially making it an 'unfair' price?

In the scenario where a company is operating at a lower capacity, what is most likely to happen to their price of direct costs AND factory overhead?

A supplier is calculating the 'fair price' for a new machine for a manufacturing company. Which aspect, though very relevant, is not a direct component of arriving at the fair price, according to the context?

If a company decides to fully allocate its fixed costs based on an anticipated production forecast, what is a possible consequence of this decision, if the actual production is substantially lower than forecasted?

A supply manager is negotiating with a long term supplier. The supplier insists on a specific price based on their total costs, while the market price is lower. According to the content, which justification cannot be invoked by the supplier?

A company is trying to determine the price at which to sell a batch of products. They need to account for a combination of semi-variable costs like electricity, direct costs like materials, and the fixed cost of their property taxes. Which cost does NOT have to be directly allocated to the products in order to derive a total cost per product?

Which scenario could lead to a supply manager having the most difficulty in determining a 'fair and just price' for a needed item?