Question

Cost-based pricing has traditionally been widely used because:_______.

A) Cost data are cheap.
B) Cost-based prices are defensible.
C) Revenues must exceed fixed costs

Answer 1

Option B (cost-based prices are defensible) would be the correct approach.

Step-by-step explanation:

• Pricing based on cost seems to be a method of determining the price by applying a gross profit to something like the goods or service cost. This ensures that any benefit is gained over the overall cost.
• Its advantages of the proposed system during which the value of a sale is established by including a percentage of revenue throughout comparison to the payment of producing the goods.

Other options in question are not relevant to the particular context. Thus the above solution would have been the best one.