In Cost-Plus Pricing, the Markup Percentage Is Calculated by Dividing

question 77

Multiple Choice

In cost-plus pricing, the markup percentage is calculated by dividing the desired ROI per unit by the

• A)fixed cost per unit.
• B)total cost per unit.
• C)total manufacturing cost per unit.
• D)variable cost per unit.

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Definitions:

Interest Tax Shield

The decrease in what one owes in income taxes by removing the cost of debt interest from the taxable income figure.

Capital Structure Puzzle

The term refers to the challenge and debate over the optimal composition of a company's debt and equity financing to maximize its value.

Optimal Capital Structure

The best mix of debt, preferred stock, and common equity that maximizes a company’s stock price.

Financial Leverage

The use of borrowed funds to finance the acquisition of assets, with the expectation that the income or capital gain from the assets will exceed the cost of borrowing.