Disadvantages of cost-plus pricing except

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Reference no: EM131112616

All of the following are disadvantages of cost-plus pricing except:

a) if the industry comprises identical firms (with identical costs), markups could be consistent among firms leading to no one firm having a competitive edge in terms of price

b) allocating and apportioning business overheads to individual products could be somewhat abitrary

c) it ignores the price elasticity of demand: for example, it may be possible to increase profits by raising or lowering price

d) the business has less incentive to cut or control costs: if costs increase, then selling prices increase. consequently, this might further erode a firm's competitiveness.

Reference no: EM131112616

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