When Using the Product Cost Concept of Applying the Cost-Plus

question 100

Multiple Choice

When using the product cost concept of applying the cost-plus approach to product pricing, what is included in the markup?

• A) desired profit
• B) total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit
• C) total costs plus desired profit
• D) total selling and administrative expenses plus desired profit

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Definitions:

Nominal Rate

The stated interest rate on a financial product, not accounting for inflation or the compounding of interest.

Effective Rate

The actual interest rate on an investment or loan, accounting for the effect of compounding over a given period.

Deposits

Funds placed into banking institutions for safekeeping. These can be made into various types of accounts including savings, checking, and money market accounts.

Effective Rate

The actual interest rate an investor receives after the effects of compounding interest are taken into account.