Question 37

Prices for Products A and C should increase

The data reveal that based on the comparison of ABC versus traditional unit costs and selling prices, there is a need to increase the prices for Products A and C to align them with the cost structure and improve profitability.

A) No change should be made

This option suggests that the current selling prices are adequate, which contradicts the data analysis indicating that adjustments are necessary. Maintaining the same prices could lead to reduced profit margins for Products A and C.

B) Only Product B price should increase

This choice implies a selective price increase for Product B only, which does not consider the data's indication that Products A and C also require price adjustments. Therefore, this option overlooks the overall pricing strategy needed for all relevant products.

C) Prices for Products A and C should increase

This option is supported by the data, which demonstrates that the costs associated with Products A and C warrant a price increase to ensure sustainability and profitability. Adjusting these prices is a strategic response to the cost analysis provided.

D) Prices for all three products should increase

While this option considers a comprehensive price increase, the data specifically indicate that only Products A and C need adjustment. Increasing the price of Product B may not be justified based on its cost structure, making this option too broad.

Conclusion

The correct answer highlights the necessity of increasing prices for Products A and C, as indicated by the data analysis. All other options fail to recognize the specific needs highlighted in the cost comparison, either suggesting inaction or unnecessary broad adjustments. Therefore, focusing on A and C aligns with the goal of maintaining profitability while addressing cost concerns.