Which statement best describes the forecasting of price/mix in revenue modeling?

• A. Price/mix captures changes in average selling price and the relative share of higher or lower priced products; forecast via pricing strategy and product portfolio changes.
• B. Price/mix only concerns currency exchange rates.
• C. Price/mix is identical to volume growth.
• D. Price/mix is purely historical and should not be forecasted.

Answer: (A)

Price/mix in revenue modeling captures how revenue changes when the average selling price shifts and the mix of products sold changes. The best forecast uses planned pricing actions (price increases, discounts, promotions) and expected changes in the product portfolio (more high-priced items, phasing out cheaper ones) to project the average selling price and the mix of products sold. This matters because revenue can grow not just from selling more units but from selling at higher prices or a shift toward more premium products. The other ideas aren’t right here: currency effects aren’t price/mix, price/mix isn’t the same as volume growth, and price/mix should be forecasted rather than treated as purely historical.