A cost-based approach to supplier pricing is feasible when the seller contributes high added value to an item through direct or indirect labor and specialized expertise.

Question

Quizplus · Accepted Answer

This is because the cost-based approach takes into account the actual costs incurred by the supplier in producing the item, which may include direct labor, indirect labor, and specialized expertise. If the supplier is contributing high added value in these areas, then a cost-based approach can be used to determine the appropriate pricing for the item. However, if the supplier is not adding significant value in these areas and the item is a commodity or highly standardized, a market-based approach to pricing may be more appropriate.

A Cost-Based Approach to Supplier Pricing Is Feasible When the Seller