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Question

Fixed costs are ignored under ______________.

A
full-cost pricing
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B
going rate pricing
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C
marginal cost pricing
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D
target pricing
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Solution

The correct option is C marginal cost pricing
Marginal cost pricing adds a profit margin to the marginal cost to determine the selling price. Full cost pricing on the other hand adds average fixed cost and a profit margin to the marginal cost to determine the selling price.

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