Product costs used for pricing and product-mix decisions generally include
A)manufacturing costs only.
B)design costs plus manufacturing costs.
C)all costs incurred along the value chain.
D)distribution costs only.
E)prime costs but not conversion costs.

Question

Quizplus · Accepted Answer

Product costs used for pricing and product-mix decisions should include all costs incurred along the value chain. This includes direct materials, direct labor, manufacturing overhead, design costs, distribution costs, and any other costs that are directly related to the production of the product. Only including manufacturing costs (A) or distribution costs (D) would result in an incomplete picture of the total cost of the product. Including only design costs (B) would be appropriate for pricing decisions related to new product development but not for all pricing and product-mix decisions. Prime costs (E) include direct materials and direct labor but not manufacturing overhead, which is also an important cost to consider in pricing and product-mix decisions.

Product Costs Used for Pricing and Product-Mix Decisions Generally Include