Question

ASSERTION: An adequate return on investment or net sales is an important pricing objective.

REASONING: To secure a sufficient return on capital employed after covering costs of production and distribution.

Options

• A is true, and R is the correct explanation for A.

• A is true, and R is not the correct explanation for A.

• A is true, but R is false.

• A is false, but R is true.

Answer 1

A is true, and R is the correct explanation for A.

Explanation:

Both A and R are true, and R correctly explains A because target‑rate‑of‑return pricing sets prices so that total revenue exceeds total cost by the needed profit, securing a sufficient return on capital employed after production and distribution expenses.