Which of the following is an advantage of the absorption approach to pricing products?
A) It displays variable and fixed cost behavior patterns.
B) It offers insights into the long run and short run effects of cutting prices on special orders.
C) It can easily address changes in sales volume.
D) It recovers all costs necessary for a firm to stay in business.

Question

Quizplus · Accepted Answer

The absorption approach to pricing products ensures that all costs, both variable and fixed, are included in the cost of production. This approach, therefore, recovers all costs necessary for a firm to stay in business.

Which of the Following Is an Advantage of the Absorption