A company will choose a cost-based pricing method based on the degree of trust it has in the cost base.

Question

Quizplus · Accepted Answer

A company's trust in the accuracy and reliability of its cost base will determine its choice of cost-based pricing method. If the company has high confidence in its cost data, it may choose to use a cost-plus or markup pricing approach. If there is less trust in cost data, the company may use target costing or other methods to set prices based on market demand and competition. Therefore, the statement is true.

A Company Will Choose a Cost-Based Pricing Method Based on the Degree