The almond butter toffee produced by Ultimate Confections in Wisconsin sells for $7.50 a box. Its price covers only its variable costs and does not cover such fixed costs as insurance and salary. A confections cookbook prepared by Ultimate Confections and sold to schools and churches that sell it as a fundraiser is another source of revenue for the company that covers fixed costs. Ultimate Confections uses _____ to set its price for its toffee.

Question

Quizplus · Accepted Answer

Ultimate Confections uses marginal cost pricing for its toffee, as the price covers only the variable costs without accounting for fixed costs.

The Almond Butter Toffee Produced by Ultimate Confections in Wisconsin