Two Advantages:
1. It is a safe approach to pricing. It ensures full coinage of cost and helps in achieving a reasonable return on capital employed.
2. The method is logical and can be defended on moral grounds. It discourages cut-throat competition in the market.
Two Disadvantages:
1. It is very often difficult to determine accurately the cost per unit due to common overheads and joint products.
2. It fails to reflect competition in the market.
