When a firm determines pricing by calculating total costs per unit and then adding markups to cover overhead costs and generate profits, it is undertaking _____________.
A) cost-based pricing
B) skimming pricing
C) penetration pricing
D) discount pricing

Question

Quizplus · Accepted Answer

Cost-based pricing involves calculating the total costs per unit and adding markups to cover overhead costs and generate profits. This approach is commonly used by firms in order to ensure that they are covering all of their costs and generate profits from their products or services. Skimming pricing involves setting a high initial price for a new product in order to capture the market's most willing buyers, while penetration pricing involves setting a low initial price for a new product in order to attract a large number of buyers and gain market share. Discount pricing involves offering lower prices to customers, typically as a promotion or special offer.

When a Firm Determines Pricing by Calculating Total Costs Per