Cost-Based Pricing

question 68

Multiple Choice

Cost-based pricing:

• A) Considers price elasticity of demand
• B) Is not commonly used
• C) Uses a mark-up percentage
• D) Is always based on variable cost

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Definitions:

Selling Costs

Expenses associated with the selling process, including advertising, sales commission, and shipping costs.

Operating Loss

A situation where a company's operating expenses exceed its revenue, indicating that it is not making a profit from its core business activities.

Variable Costs

Costs that vary directly with the level of production or sales volume.

Fixed Costs

Fixed costs include payment for rent, employee salaries, and insurance expenses, which do not vary with production or sales volume.