What Costs Are Used in Incremental-Cost Pricing

question 222

Multiple Choice

What costs are used in incremental-cost pricing?

• A) all relevant variable costs in setting a product's price
• B) costs based on price theory and profit maximization
• C) only those costs that are directly attributable to a specific output
• D) all fixed costs that are not attributable to total variable cost (TVC)

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Definitions:

Price Hike

An increase in the price of goods or services offered by a company.

Value-Based Pricing

A pricing strategy where the selling price of a product or service is based on the perceived value to the customer rather than the cost of production or market price.

Operating Cost

The expenses associated with the day-to-day running of a business, excluding the cost of goods sold.

Useful Life

The estimated duration a long-term asset is expected to be economically utilizable before it needs to be replaced or significantly overhauled.