Using full costs for pricing decisions can be justified in which of the following circumstances?
A)When a firm enters into a long-term contractual relationship to supply a product.
B)For development and production of customized products and contracts with the government.
C)When managers initially set prices to cover full costs plus a profit then adjust to reflect market conditions.
D)All of the answers are correct.

Question

Quizplus · Accepted Answer

Using full costs for pricing decisions is justified in all the provided circumstances: long-term contracts ensure recovery of full costs over time, customized products and government contracts often require full cost recovery for pricing, and setting initial prices to cover full costs plus profit before adjusting for market conditions is a common pricing strategy.

Using Full Costs for Pricing Decisions Can Be Justified in Which