Asked by Nicholas Maynard on Jun 13, 2024
Verified
If a business knows how many units will be sold and what the fixed costs and the variable costs will be, ______ allows the selling price to be set to produce a given rate of return.
A) cost-plus pricing
B) target-return pricing
C) penetration pricing
D) reference pricing
Target-Return Pricing
A pricing strategy where the price is set to achieve a targeted return on investment or profit over costs.
Cost-Plus Pricing
A pricing strategy where the selling price is determined by adding a specific markup to a product's unit cost, ensuring a profit margin is achieved.
Penetration Pricing
A pricing strategy where a product is offered at a low price to gain market share quickly.
- Identify and explain the concepts of fixed and variable costs, and their impact on pricing and profit.
Verified Answer
AV
Adriana Velandia RojasJun 14, 2024
Final Answer :
B
Explanation :
Target-return pricing is a pricing strategy where the selling price is set based on the cost of the product plus a target rate of return on investment. This method is used when a business knows its fixed and variable costs and the number of units it expects to sell.
Learning Objectives
- Identify and explain the concepts of fixed and variable costs, and their impact on pricing and profit.