Which of the following is a disadvantage of using the historical cost-plus approach to arrive at a selling price?
A) It does not include the shipping and ancillary charges as part of a product's cost.
B) It ignores demand and competitive conditions in the target markets.
C) It fails to address the indirect manufacturing costs that a company is likely to incur.
D) It cannot be used by companies that are new to exporting products.

Question

Quizplus · Accepted Answer

The historical cost-plus approach only considers the costs incurred in production and does not take into account demand and competitive conditions in the target market. This can lead to a selling price that is not optimal for the company's profitability or market conditions. The other options are not disadvantages of the historical cost-plus approach.

Which of the Following Is a Disadvantage of Using the Historical