Durango Industries Employs Cost-Plus Pricing Formulas to Derive Selling Prices

question 96

Multiple Choice

Durango Industries employs cost-plus pricing formulas to derive selling prices for its various products. If the formulas are all used correctly, which of the following cost bases will result in the highest selling price?

• A) Variable manufacturing cost.
• B) Absorption manufacturing cost.
• C) Total variable cost.
• D) Total cost.
• E) None of these because if the formulas are applied correctly, all should result in the same selling price through the use of varying markups.

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