Question 36

What characterizes the variable-cost pricing approach?

		No unit of a similar product is different from any other unit in terms of cost.
		Prices are often set on a cost-plus basis, that is, total costs plus a profit margin.
		Each unit must bear its full share of the total fixed and variable cost.
		This approach is suitable when a company has high variable costs relative to its fixed costs.
		Any contribution to fixed cost after variable costs are covered is profit to the company.