A Company Using Cost-Plus Pricing Starts with an Estimate of the Cost

question 122

True/False

A company using cost-plus pricing starts with an estimate of the cost and adds a markup to arrive at a price that allows for a reasonable level of profit.

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Definitions:

Expected Sales

Forecasted or projected revenue figures estimated from future sales over a specific period.

Flexible Budgeting

A budgeting process that allows for adjustments to budgetary allocations based on changes in actual performance, revenue, or other factors.

Sales Budget

A financial plan that estimates the revenues expected from sales over a future period.

Production Budget

An estimate of all costs associated with manufacturing a product for a set period.