Phil
09-19-2001, 02:02 PM
I'm constantly coming across questions where the 2nd assertion is not really a reason for the 1st assertion, but it is very closely related, usually in the form of a definition. For example, hypothetically:
ASSERTION: Full Cost Pricing is bad.
REASON: Full cost pricing allocates all expenses to the expense rates used in pricing.
Clearly, both statements are true, but would you answer (A) or (B) on a question like this? I really have no idea what the exam writers want. To me, the given "reason" is just the definition of Full Cost pricing, and not a real "reason" at all. A true "reason" would be something like "In full cost pricing, the company first incurs costs and then must achieve sales volumes to cover them".
What do you think? Thank you :smile:
ASSERTION: Full Cost Pricing is bad.
REASON: Full cost pricing allocates all expenses to the expense rates used in pricing.
Clearly, both statements are true, but would you answer (A) or (B) on a question like this? I really have no idea what the exam writers want. To me, the given "reason" is just the definition of Full Cost pricing, and not a real "reason" at all. A true "reason" would be something like "In full cost pricing, the company first incurs costs and then must achieve sales volumes to cover them".
What do you think? Thank you :smile: