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Questions and Answers
Full cost-plus pricing is a method of determining the sales price by calculating the ______ cost of the product
full
Since demand may be determining price, there will be a profit maximizing combination of price and ______
demand
Output volume is a key factor in the ______ absorption rate
overhead
Marginal cost-plus pricing/mark-up pricing involves adding a profit margin to the marginal cost of ______/sales
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There is no attempt to establish optimum ______
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Study Notes
Pricing Methods
- Full cost-plus pricing calculates the sales price by adding a markup to the total cost of the product.
Demand and Profit Maximization
- Demand influences price, and there is a profit-maximizing combination of price and output.
Absorption Rate
- Output volume affects the overhead absorption rate.
Marginal Cost-Plus Pricing
- Marginal cost-plus pricing, also known as mark-up pricing, involves adding a profit margin to the marginal cost of production or sales.
Optimum Pricing
- There is no attempt to establish an optimum price in certain pricing methods.
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Description
Learn about the two forms of cost-plus pricing, which involve establishing the unit cost and adding a mark-up or sales margin. Understand the advantages of full cost-plus pricing as a quick, simple, and cheap method of pricing.
