UNIT 3

Question 1

What are the two criteria needed in order for a cost be a relevant cost?

Answer 1

1. There are differences between alternatives.
2. It will be a future cost.

Question 2

TRUE OR FALSE:

If something is a sunk cost, it can’t be a relevant cost.

Answer 2

True

Question 3

It is a past cost that cannot be changed.

Answer 3

Sunk Cost

Question 4

This is setting a low initial price to capture market.

Answer 4

Penetration Pricing

Question 5

This is setting a high price to cover costs instantly.

Answer 5

Price Skimming