Frequently,companies do not use a contribution approach to pricing because ________.
A) it promotes price stability
B) it provides the best defense for legal challenges
C) of a fear of underpricing products by using variable costs to price products
D) it is not sensitive to cost-volume-profit relationships

Question

Quizplus · Accepted Answer

Using a contribution approach to pricing means that variable costs are taken into account when setting prices. Some companies may fear underpricing their products by relying solely on variable costs and may prefer to include fixed costs as well to ensure they are making a profit. Therefore, companies may not use the contribution approach to pricing.

Frequently,companies Do Not Use a Contribution Approach to Pricing Because