Book Publishers Often Use a Cost-Plus Pricing Strategy

question 87

Multiple Choice

Book publishers often use a cost-plus pricing strategy.One reason for this is

• A)most publishers do not hire economists who can determine the number of books they must sell to equate marginal cost and marginal revenue.
• B)publishers do not want to incur the expense of determining the profit-maximizing strategy. They prefer cost-plus pricing because of its lower cost.
• C)much of the cost of publishing textbooks is difficult to assign to any particular book.
• D)bookstores, not publishers, ultimately determine how many books will be produced.

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Definitions:

Specific Identification Method

An inventory valuation method that tracks the cost of each individual item in inventory.

Consignor

The person or entity that owns goods on consignment and sends them to the consignee for sale or display.

Days' Sales in Inventory

A financial metric that measures the average number of days it takes for a company to sell its entire inventory during a given period.

Consignee

The individual or entity to whom goods are shipped to be sold on behalf of the owner, retaining no legal ownership until sales occur.