In using the variable cost concept of applying the cost-plus approach to product pricing, what is...
Question:
In using the variable cost concept of applying the cost-plus approach to product pricing, what is included in the markup?
a. Total costs plus desired profit
b. Desired profit
c. Total selling and administrative expenses plus desired profit
d. Total fixed manufacturing costs, total fixed selling, and administrative expenses, and desired profit
Cost-Based Pricing:
Cost-Based Pricing is variable cost pricing that set the price of the products or services based on the actual or projected costs. In general, there are four types of cost-based pricing, cost-plus pricing, mark-up pricing, break-even cost pricing, and target profit pricing.
Answer and Explanation: 1
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View this answerThe correct answer is option c. total selling and administrative expenses plus desired profit.
- Option a is incorrect. The total cost plus desired...
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Variable Cost Pricing: Definition & Example
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Chapter 10 / Lesson 5
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In variable cost pricing the company sets the selling price by adding markup to the incurred variable costs. Learn about the definition of variable cost pricing, and understand how it is used through an example.
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