Based on the Following Cost Data, What Conclusions Can You $\text { Total Cost }$

question 55

Multiple Choice

Based on the following cost data, what conclusions can you make about Product A and Product B? $\text { Total Cost }$
$\begin{array}{|l|r|c|}\hline \text { Production: } &{\text { Product A }} & \text { Product B } \\\hline 10 \text { units } & \$ 100 & ? \\\hline 100 \text { units } & \$ 1,000 & ? \\\hline 1,000 \text { units } & \$ 10,000 & ? \\\hline\end{array}$
$\text { Unit Cost }$

$\begin{array}{|l|c|r|}\hline \text { Production: } & \text { Product A } & \text { Product B } \\\hline 10 \text { units } & ? & \$ 10,000 \\\hline 100 \text { units } & ? & \$ 1,000 \\\hline 1,000 \text { units } & ? & \$ 100 \\\hline\end{array}$

• A) Product A is a fixed cost and Product B is a variable cost.
• B) Product A is a variable cost and Product B is a fixed cost.
• C) Product A and Product B are both variable costs.
• D) Product A and Product B are both mixed costs.

Recognize the effects of differential pricing on product availability and retailer profits.

Identify the conditions under which accepting orders from lower price buyers is advantageous.

Comprehend the impact of capacity commitment to lower price buyers on wastage and higher price buyer accommodation.

Understand the strategic use of pricing to manage demand across different customer segments and time periods.