Question

Companies following the ____ philosophy insist that no unit of a similar product is different from any other unit in term of cost and that each unit must bear its full share of the total fixed and variable cost

Answer 1

D) full-cost pricing

Step-by-step explanation:

When a company follows the full cost pricing strategy it will include all the relevant variable costs and fixed costs when determining the price of the good or service offered.

In other words, in order to determine the price of a product, you must calculate the direct materials used, direct labor, overhead costs per unit and selling and administrative costs per unit. Once you add them all up, you establish a markup percentage and determine the selling price.