When can a firm justify the use of full costs for pricing decisions?
A)when a firm enters into a short term contractual relationship to supply a product.
B)for development and production of standardized products.
C)when managers initially set prices to cover full costs plus a profit then adjust to reflect market conditions.
D)because they are required by generally accepted accounting principles.

Question

Quizplus · Accepted Answer

C) Managers often initially set prices to cover full costs plus a desired profit margin and then adjust these prices to reflect market conditions, competition, and customer demand. This approach ensures that all costs are covered and a profit is made, while also allowing flexibility to adapt to the market.

When Can a Firm Justify the Use of Full Costs