When Determining the Markup to Be Used in a Cost-Plus

question 50

Multiple Choice

When determining the markup to be used in a cost-plus pricing formula, many companies base the markup on a target:

• A) return on investment.
• B) sales margin.
• C) capital turnover.
• D) earnings per share.
• E) debt-to-equity ratio.

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Definitions:

Central Limit Theorem

A statistical theory stating that the sampling distribution of the sample mean of any independent, random variable will approximate a normal distribution, given a sufficiently large sample size.

Sampling Distribution

A sampling distribution is a probability distribution of a statistic obtained through a large number of samples drawn from a specific population, used to infer properties of the population.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, showing how much each value in the set varies from the mean.

Sampling Distribution

The probability distribution of a given random-sample-based statistic.