Which of the Following Is True of the Full-Cost Pricing

question 58

Multiple Choice

Which of the following is true of the full-cost pricing approach?

• A) In this approach, any contribution to fixed cost after variable costs are covered is profit to the company.
• B) In this approach, the firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets.
• C) In this approach, prices are often set on a cost-plus basis, that is, total costs plus a profit margin.
• D) This approach is a practical approach to pricing when a company has high fixed costs and unused production capacity.
• E) This approach insists that each unit of a similar product is treated differently in terms of cost.

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Definitions:

Globalization and Localization

The balance between adapting business practices to local cultures and markets (localization) while leveraging global trends and economies of scale (globalization).

Scenario-Based Analysis

A method of planning that uses hypothetical situations to anticipate potential challenges and devise strategic responses.

Competitive Intelligence

The gathering and analysis of information about competitors, market conditions, and other external factors that influence competitive advantage.

Strategic Indicators

Metrics or measures used to assess the performance or outcome of an organization's strategy.