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Determining Costs and Social Objectives of Companies

JUAN RAVE DIEZ

Created on April 8, 2023

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Determining Costs and Social Objectives of Companies

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What are some examples of social objectives that companies may consider when determining costs and setting prices?

Profit maximization and cost reduction

Social responsibility and sustainability

Employee benefits and job security

Market share and competition

¡INCORRECT!

Social responsibility and sustainability: Determining costs according to the social objectives of companies may involve goals beyond profit maximization, such as social responsibility and sustainability. Examples of social costs and benefits that may be considered include greenhouse gas emissions, water pollution, and natural resource usage.

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How does a trading company determine the cost of goods sold?

By adding the acquisition cost to warehousing and distribution expenses

By using the perpetual inventory method

By using the periodic inventory method

By subtracting the acquisition cost from warehousing and distribution expenses

¡INCORRECT!

By adding the acquisition cost to warehousing and distribution expenses: In a trading company, the cost of goods sold is made up of the acquisition cost (the cost of acquiring the goods) plus warehousing and distribution expenses.

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What factors may a company with sustainability as its social objective consider when setting prices?

Market share and competition

Staff salaries, supplies, and equipment costs

Greenhouse gas emissions, water pollution, and natural resource usage

Cost of materials, labor, and manufacturing expenses

¡INCORRECT!

Greenhouse gas emissions, water pollution, and natural resource usage: a company with sustainability as its social objective may consider environmental costs associated with the production and consumption of its products, such as greenhouse gas emissions, water pollution, and natural resource usage, when setting its prices.

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How is the cost of providing services calculated in a service company?

Direct and indirect costs associated with providing the service

Direct labor costs only

Overhead costs such as rent, electricity, and insurance

Market demand and pricing trends

¡INCORRECT!

Direct and indirect costs associated with providing the service: In a service company, the cost is made up of direct and indirect costs associated with providing the service, such as staff salaries, supplies, equipment costs, and overhead costs such as rent, electricity, heating, insurance, and other administrative expenses.

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Why is it important for companies to incorporate social and environmental costs and benefits into pricing decisions?

To minimize costs and increase profitability

To ensure accuracy and transparency

To comply with legal regulations

To maximize short-term profitsincorrecta

¡INCORRECT!

To ensure accuracy and transparency: Incorporating social and environmental costs and benefits into pricing decisions may require additional data and analysis to ensure accuracy and transparency. This is important to make informed decisions that align with the company's social objectives.

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What are some challenges companies may face when determining costs according to social objectives?

Increased competition in the market

Lack of data and analysis

Higher production costs

Decreased profitability

¡INCORRECT!

Lack of data and analysis: Companies may face challenges in determining costs according to social objectives due to a lack of data and analysis. This can make it difficult to accurately assess and incorporate social and environmental costs and benefits into pricing decisions.

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What are some potential benefits of incorporating social objectives into cost determination for companies?

Increased market share

Enhanced brand reputation

Higher customer loyalty

All of the above

¡INCORRECT!

All of the above: potential benefits of incorporating social objectives into cost determination for companies mentioned in the text include increased market share, enhanced brand reputation, and higher customer loyalty. These benefits can result from aligning with social objectives and demonstrating a commitment to sustainability, social responsibility, and equity

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