The manager of A+ Ltd. wants to set the price for its products. Which one of the following is the most appropriate approach for pricing?

Question

Answer

Contribution margin approach should be used. One has to maximise the contribution to fixed costs and profits. Fixed costs are irrelevant to pricing because they are past costs.

Answer

The full costing model should be used so that a normal volume of business recovers all costs, including fixed costs, otherwise the operation is uneconomic and has to discontinue.

Answer

Bulk-selling approach should be used. Attention should be focused on getting more sales so that growing volume would generate economies of scale.

Answer

It depends on the situation (it depends on the context which includes time scale, range of output and hierarchy).

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The manager of A+ Ltd. wants to set the price for its products. Which one of the...

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