Samuels Company is considering pricing its 10,000-gallon petroleum tanks using either variable manufacturing or full product costs as the base.The variable cost base provides a prospective price of $6,000 and the full cost base provides a prospective price of $6,100.The difference between the two prices is ________.
A) the estimated amount of profit
B) that the variable cost base estimates fixed costs in the markup percentage while the full cost base includes an amount for fixed costs
C) known as price discrimination
D) caused by the inability of most companies to estimate fixed cost per unit with any degree of reliability

Question

Quizplus · Accepted Answer

The difference in prices is due to the variable cost base only including variable manufacturing costs in the markup percentage, while the full cost base also includes an amount for fixed costs. This means that the full cost base includes a higher price to cover fixed costs, resulting in a higher overall price. The other options are not accurate explanations for the difference in prices.

Samuels Company Is Considering Pricing Its 10,000-Gallon Petroleum Tanks Using