Which of the Following Characterizes the Variable-Cost Pricing Approach

question 48

Multiple Choice

Which of the following characterizes the variable-cost pricing approach?

• A) In this approach, prices are often set on a cost-plus basis, that is, total costs plus a profit margin.
• B) This approach insists that no unit of a similar product is different from any other unit in terms of cost.
• C) This approach insists that each unit must bear its full share of the total fixed and variable cost.
• D) This approach is suitable when a company has high variable costs relative to its fixed costs.
• E) In this approach, any contribution to fixed cost after variable costs are covered is profit to the company.

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Definitions:

Phosphorus

A chemical element with symbol P and atomic number 15, essential for life, involved in the formation of DNA and RNA, and a key component of ATP, the energy currency of cells.

Plasma Membrane

The plasma membrane is the lipid bilayer that encloses the cytoplasm of a cell, controlling the passage of substances in and out of the cell.

Sodium Chloride

Common table salt, a compound formed from sodium and chlorine atoms, essential for life and used in food seasoning and preservation.

Dissociation

A process in which molecules or ionic compounds split into smaller particles such as atoms, ions, or radicals, often reversibly.