Chapter A, Problem A.6Q

To determine

Concept introduction:

Pricing strategies indicate the method of calculation of the price of a product or service. Some pricing strategies take cost as a basis and add a margin to calculate the price, for example, cost-plus pricing. Some pricing policies take sales price as a basis and make a target for the cost, for example, target costing. 

To indicate: the assumption of absorption costing approach about the consumer’s reaction on prices.