Question

Diego's company was bidding on the construction of a new penguin display at a zoo. When putting together his bid, Diego began by determining what the zoo would be willing to pay for the structure, and then subtracting a reasonable profit for the company. The result would be the cost of production. For example: If price to zoo = $8 million, and company profit margin = $3 million, the cost to produce cannot exceed $5 million. [$8 million – $3 million = $5 million.] The demand-based pricing strategy in this example is called

Answer 1

Answer:

The demand-based pricing strategy in this example is called target costing.

Explanation:

Target costing is a way to deal with decide an item's life-cycle cost which ought to be adequate to create determined usefulness and quality, while guaranteeing its ideal benefit. It includes setting an objective expense by taking away an ideal net revenue from a competitive market cost.This scenario is the same one.