The basic problem with the average-cost approach is that it
A) does not consider cost variations at different levels of output.
B) does not consider historical values.
C) does not add a reasonable markup to the average cost of a product.
D) is not commonly used.
E) is a complex method.

Question

Quizplus · Accepted Answer

The average-cost approach assumes that costs are constant at all levels of output, which is not the case in reality. This can lead to incorrect pricing decisions that do not reflect actual costs at different levels of production.

The Basic Problem with the Average-Cost Approach Is That It