What Is a Disadvantage of Cost-Plus Pricing

question 53

Multiple Choice

What is a disadvantage of cost-plus pricing?

• A) It focuses more on volume.
• B) It is not very intuitive
• C) It is harder to determine how many units need to be sold to break even.
• D) It's difficult to determine the correct markup percentage
• E) It ignores the feasibility of selling the product.

---

Definitions:

Contracts

Legal agreements between two or more parties that are enforceable by law, outlining responsibilities, duties, and sharing of benefits.

IRR

Internal Rate of Return; the discount rate that makes the net present value of all cash flows from a particular project zero.

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business.

Project

A temporary endeavor undertaken to create a unique product, service, or result with specific objectives and defined beginning and end.