For pricing decisions,full product costs:

Question

Quizplus · Accepted Answer

Full product costs should include all direct costs (such as materials and labor) as well as an appropriate allocation of indirect costs (such as rent and utilities) across all business functions. This provides a more accurate picture of the true cost of producing and selling a product, helping to ensure that pricing decisions are based on realistic and sustainable costs. Option A is too limited because it only considers manufacturing and selling costs, while option C is too broad as not all costs may be traceable to a specific product. Option D is incorrect because it suggests that full product costs should result in the highest possible prices, which is not necessarily true as pricing decisions should also consider market demand and competitive factors.

For Pricing Decisions,full Product Costs