What Cost Concept Used in Applying the Cost-Plus Approach to Product

question 126

Multiple Choice

What cost concept used in applying the cost-plus approach to product pricing includes only total manufacturing costs in the cost amount to which the markup is added?

• A) variable cost concept
• B) total cost concept
• C) product cost concept
• D) opportunity cost concept

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Definitions:

Retained Earnings

The cumulative amount of profit retained by the company and not paid out in the form of dividends to owners.

Net Income

The total earnings or profit of a company after subtracting all expenses, taxes, and costs, also known as net earnings.

Goodwill

The price paid for an asset in excess of its book value. You will see this on the balance sheet when the company has made one or more large acquisitions.

Intangible Assets

Non-physical assets owned by a business, such as intellectual property, brand names, and customer relationships, which add value to the company.