Businesses hold short-term securities for which of the following reasons?

• As a substitute for cash
• As a temporary repository for cash being accumulated for a specific purpose
• As a buffer against bad debt losses
• Answers (a) and (b)
• Answers (a), (b), and (c)

Assume a clinical laboratory is considering a new test. Here are the key assumptions: annual fixed direct costs = $20,000, annual overhead allocation = $10,000, variable cost per test = $5, and expected volume = 5,000 tests. What price should be set under marginal cost pricing?

• $11
• $7
• $9
• $13
• $5