43.Under the Marginal cost pricing, the price is determined on the basis of; A. Fixed cost B. Variable cost C. Total cost D. Average cost
Question
43.Under the Marginal cost pricing, the price is determined on the basis of; A. Fixed cost B. Variable cost C. Total cost D. Average cost
Solution
Under the Marginal cost pricing, the price is determined on the basis of Variable cost. So, the correct answer is B. Variable cost.
Here's a step by step explanation:
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Marginal cost pricing is a pricing strategy which involves setting the price of a product at or slightly above the variable cost to produce an additional unit of output.
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Variable costs are those costs that vary with changes in the level of output. These may include costs of raw materials, direct labor costs, and direct expenses related to the production process.
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In this pricing strategy, the fixed costs, total costs, and average costs are not considered while determining the price. The price is set based on the variable cost of producing one more unit of the product.
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Therefore, under the marginal cost pricing, the price is determined on the basis of variable cost.
Similar Questions
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