What Characterizes the Variable-Cost Pricing Approach

question 19

Multiple Choice

What characterizes the variable-cost pricing approach?

• A) Prices are often set on a cost-plus basis, that is, total costs plus a profit margin.
• B) No unit of a similar product is different from any other unit in terms of cost.
• C) Each unit must bear its full share of the total fixed and variable cost.
• D) This approach is suitable when a company has high variable costs relative to its fixed costs.
• E) Any contribution to fixed cost after variable costs are covered is profit to the company.