TRUE OR FALSE

1. In a competitive environment, the company must set a target cost and a target selling price.
2. The cost-plus pricing approach establishes a cost base and adds a markup to this base to determine a target selling price.
3. The cost-plus pricing model gives consideration to the demand sidewhether customers will pay the target selling price.
4. Sales volume plays a large role in determining per unit costs in the cost-plus pricing approach.
5. In time-and-material pricing, the material charge is based on the cost of direct materials used and a material loading charge for related overhead costs.
6. Divisions within vertically integrated companies normally sell goods only to other divisions within the same company.
7. There are two approaches for determining a transfer price: cost-based and market-based.
8. If a cost-based transfer price is used, the transfer price must be based on variable cost.
9. Negotiated transfer price should be used when an outside market for the goods doesnt exist.
10. An absorption-cost approach is consistent with generally accepted accounting principles because it defines the cost base as the manufacturing cost.
11. In most cases, a company sets the price instead of it being set by the competitive market.
12. The material loading charge is expressed as a percentage of the total estimated cost of materials for the year.