The Cost-Plus Pricing Approach's Major Advantage Is

question 112

Multiple Choice

The cost-plus pricing approach's major advantage is

• A) it considers customer demand.
• B) that sales volume has no effect on per unit costs.
• C) it is simple to compute.
• D) it can be used to determine a product's target cost.

---

Definitions:

FIFO Costing

An inventory valuation method that assumes that the first items placed in inventory are the first ones sold, standing for First In, First Out.

Unit Costs

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Direct Materials

Raw materials that can be directly traced to the production process of a good or service, constituting a significant part of the total cost of production.

Weighted Average Method

A method for calculating the cost of goods sold and the final inventory value by using the average cost of all items available for sale during the accounting period, weighted by quantity.