A primary reason that a firm would use average-cost pricing is that it

Question

Abbie Bean

Business

4 July, 05:02

A primary reason that a firm would use average-cost pricing is that it

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Answers (1)

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Caitlyn Randall · Answer 1

it is very simple and easy to do it.

Explanation:

Companies that use average cost pricing just add markup that they consider reasonable to the average cost of a product, and you have the final selling price of the product.

A disadvantage of using average cost pricing is that t does not consider how costs change as your sales level changes. This method usually works best when the company is able to estimate its total sales ad then use that estimation to calculate the average cost price.