Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Target return pricing is a strategy where a company sets prices to cover all costs and which of the following?

Maximize total sales volume

Achieve a specified profit or return on investment

Match competitors' prices

Minimize production costs

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Verified step by step guidance

Understand the concept of target return pricing: This pricing strategy involves setting a price that ensures all costs are covered while achieving a specific profit or return on investment (ROI). It is commonly used by companies aiming to meet financial goals.

Identify the key components of target return pricing: These include total costs (fixed and variable), desired profit or ROI, and expected sales volume. The formula for target return pricing can be expressed as:

P = \frac{C + T}{Q}

, where P is the price per unit, C is total costs, T is the target profit, and Q is the expected sales volume.

Analyze the options provided in the problem: The correct answer is 'Achieve a specified profit or return on investment,' as this aligns with the goal of target return pricing. The other options, such as maximizing sales volume, matching competitors' prices, or minimizing production costs, are not the primary focus of this strategy.

Relate the concept to practical application: Companies use target return pricing to ensure financial stability and meet investor expectations. This strategy is particularly useful in industries with predictable costs and sales volumes.

Summarize the reasoning: The essence of target return pricing is to set a price that guarantees covering all costs while achieving a predetermined profit or ROI. This approach is strategic and goal-oriented, making it distinct from other pricing strategies like competitive pricing or cost minimization.