Erickson Company is considering pricing its 5,000-gallon petroleum tanks using either variable manufacturing or full product costs as the base

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Multiple Choice

Erickson Company is considering pricing its 5,000-gallon petroleum tanks using either variable manufacturing or full product costs as the base. The variable cost base provides a prospective price of $3,000 and the full cost base provides a prospective price of $3,050. The difference between the two prices is

a. the estimated amount of profit.

b. that the variable cost base estimates fixed costs in the markup percentage while the full cost base includes an amount for fixed costs.

c. known as price discrimination.

d. caused by the inability of most companies to estimate fixed cost per unit with any degree of reliability.

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