A company that is a price taker would most likely use which of the following methods?
A) Time-and-material pricing
B) Target costing
C) Cost plus pricing, contribution approach
D) Cost plus pricing, absorption approach

Question

Quizplus · Accepted Answer

Target costing is most suitable for a price taker because it starts with the market price and then subtracts the desired profit margin to determine the maximum cost the company can afford. This approach is aligned with the conditions of being a price taker, where the market dictates the price and the company must adjust its costs accordingly.

A Company That Is a Price Taker Would Most Likely