To use target return pricing, one must first calculate total ________ costs.
A) fixed
B) variable
C) marginal
D) minimum
E) average

Question

Quizplus · Accepted Answer

Target return pricing involves setting a price that will result in a desired level of profit or return on investment. To determine this price, one must first calculate the total fixed costs involved in producing and selling the product or service. Variable costs and marginal costs may be taken into consideration in determining the overall cost structure, but it is the fixed costs that are most relevant for target return pricing. Minimum and average costs are not typically used in this approach to pricing.

To Use Target Return Pricing, One Must First Calculate Total