In the Cost-Plus Pricing Approach, the Desired ROI Per Unit

question 81

Multiple Choice

In the cost-plus pricing approach, the desired ROI per unit is computed by multiplying the ROI percentage by

• A) fixed costs.
• B) total assets.
• C) total costs.
• D) variable costs.

---

Definitions:

Average Collection Period (ACP)

A financial ratio that measures how long it takes to collect on credit sales. Also called days sales outstanding (DSO).

Credit Policy

A set of guidelines that a company follows to determine credit terms for customers, which encompass payment period, amount of credit, and the discount terms.

Cash Discount

A reduced price offered by a seller for goods or services if the buyer pays in cash, or within a specified time period, encouraging early payment.

Receivables

Money that is owed to a company by its customers for goods or services provided on credit, represented as assets on the balance sheet.