The costs that actually determine the profit impact of the pricing decision are referred to as
A) acquisition costs.
B) usage costs.
C) possession costs.
D) disposal costs.
E) incremental costs.

Question

Quizplus · Accepted Answer

Incremental costs are the costs directly related to producing and selling one additional unit of a product or service. These costs include materials, labor, and overhead. By considering only incremental costs, a company can determine how much profit will be made on each additional unit sold and make pricing decisions accordingly. The other options listed (acquisition costs, usage costs, possession costs, and disposal costs) may impact overall costs, but do not directly determine the profit impact of a pricing decision.

The Costs That Actually Determine the Profit Impact of the Pricing