Diego's Company Was Bidding on the Construction of a New

Multiple Choice

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

A) target costing.
B) penetration pricing.
C) cost-based pricing.
D) volume pricing.