Which Pricing Approach Calculates the Amount That Can Be Spent

question 60

Multiple Choice

Which pricing approach calculates the amount that can be spent to make a product by determining how much consumers are willing to pay and then subtracting a reasonable profit?

• A)skimming
• B)cost-based pricing
• C)target costing
• D)demand-based pricing

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Definitions:

Tax Consequence

The financial effects that taxes have on various financial decisions, affecting net investment income or costs.

Marginal Tax Rate

Marginal Tax Rate is the rate at which the last dollar of income is taxed, reflecting the percentage of tax applied to your next dollar of income.

Cash Flow Estimate

An assessment of the amount of money expected to flow in and out of a business over a specific period.

Marginally Profitable

Describes a business or investment that generates a slight profit above its break-even point.