Joe Bergerson makes and sells maple racks for cooling cakes and cookies. Joe knows that it costs $15 to make one rack, and he wants to earn a 20 percent profit on each rack. Which approach to pricing is Joe most likely to use?
A) demand-based pricing
B) target costing
C) cost-plus pricing
D) yield management pricing
E) value pricing

Question

Quizplus · Accepted Answer

Joe is most likely to use cost-plus pricing, which involves adding a markup (in this case, 20%) to the cost of producing the product. This will ensure that he earns a profit on each rack he sells.

Joe Bergerson Makes and Sells Maple Racks for Cooling Cakes