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

question 1

Multiple Choice

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

• A) In this approach, firms regard foreign sales as bonus sales and assume that there will be no return over their variable costs.
• B) In this approach, firms are 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:

Placenta

An organ that develops in the uterus during pregnancy, supplying oxygen and nutrients to the fetus and removing waste products via the umbilical cord.

Endodermal

Pertaining to the innermost layer of the embryonic germ layers, which gives rise to the lining of the digestive and respiratory systems.

Epidermal

Relating to the epidermis, the outermost layer of skin, which provides a barrier against environmental damage.

Afterbirth

The placenta and fetal membranes expelled from the uterus following the birth of a baby.