If a manager sells more than was expected when average-cost pricing was used to set a price, the firm will lose money.

Question

Quizplus · Accepted Answer

Average-cost pricing may result in a higher profit margin if the manager sells more than expected due to the lower per-unit cost. However, if the sales are much higher than expected, it may signal that the price was set too low and the firm could potentially make even higher profits by increasing the price. Therefore, the firm would not necessarily lose money.

If a Manager Sells More Than Was Expected When Average-Cost