3.4 Exercise
1. One of the dangers of allocating common fixed costs to a product line is that such
allocations can make the line appear _______ than it really is.
2. In a decision to drop a segment, the _______ of the space occupied by the segment
would be the profit that could be derived from the best alternative use of the
space.
3. Only costs and benefits that differ among _______ are relevant in a decision.
4. Customer sensitivity to price is said to be _______ if a change in price has little
effect on number of units sold.
5. Companies that use _______ pricing establish selling prices based on the economic
value that the benefits of their products and services provide to customers.
6. _______ costing is used to estimate what a new product’s market price is likely to
