BLG produces and sells yachts for wealthy customers. BLG's accountants produced the data shown below as a basis for client negotiations for the coming year: Assume that all the preceding costs are avoidable. The company will incur an additional $800 in unavoidable costs during the coming year. BLG's managers want to achieve a profit margin of 80% based on total costs. BLG's system is best described as

Question

BLG produces and sells yachts for wealthy customers. BLG's accountants produced the data shown below as a basis for client negotiations for the coming year:  Assume that all the preceding costs are avoidable. The company will incur an additional $800 in unavoidable costs during the coming year. BLG's managers want to achieve a profit margin of 80% based on total costs. BLG's system is best described as

Quizplus · Accepted Answer

BLG's system is best described as cost-based pricing because they are using the total costs as the basis for determining their desired profit margin. They are not considering external market factors or the product's life cycle in their pricing decisions. Additionally, they are aiming to achieve a specific profit margin based on their costs, which is a key characteristic of cost-based pricing.

BLG Produces and Sells Yachts for Wealthy Customers