Question

The cost approach to pricing:?

1) means prices are set to cover direct costs, contribute to indirect, and attain a profit.
2) implies that cost analysis is the only technique that should be employed to negotiate prices.
3) is the only defensible pricing mechanism for ethical companies to use.
4) implies that prices are set based on the cost the market will bear.
5) means that prices are adjusted regularly to ensure that the selling organization recoups all its costs.

Answer 1

The cost approach to pricing involves setting prices to cover costs and achieve a profit, but it is not the only pricing mechanism used by businesses.

Step-by-step explanation:

The cost approach to pricing means that prices are set to cover direct costs, contribute to indirect costs, and attain a profit. It is one of the methods used by businesses to determine the selling price of their products or services. However, it is not the only pricing mechanism and other factors like market demand and competition also influence pricing decisions.