The cost approach to pricing:
A)is the only defensible pricing mechanism for ethical companies to use.
B)implies that prices are set based on the cost the market will bear.
C)means prices are adjusted to ensure the selling organization recoups all costs.
D)implies that cost analysis is the only technique to be used to negotiate prices.
E)means prices are set to cover direct costs,contribute to indirect costs,and provide a profit.

Question

Quizplus · Accepted Answer

The cost approach to pricing means that prices are set to cover direct costs, contribute to indirect costs, and provide a profit. This approach is commonly used in most industries, and it allows businesses to ensure that they are covering their expenses while also making a profit. While cost analysis is an important aspect of determining prices, it is not the only technique that should be used when negotiating prices. Overall, the cost approach to pricing is a practical and effective approach for businesses to use when determining their prices.

The Cost Approach to Pricing