When Using the Contribution Approach to Set Selling Prices, the Markup

question 3

Multiple Choice

When using the contribution approach to set selling prices, the markup must cover:

• A) Variable costs plus a reasonable return on investment
• B) Fixed costs plus a reasonable return on investment
• C) Period costs plus a reasonable return on investment
• D) None of these are correct

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Definitions:

Weighted Average Cost

A method of calculating the combined cost of goods available for sale by weighting the cost of each item by the quantity purchased.

Bonds Outstanding

The total amount of issued bonds by a corporation or government entity that have not yet been redeemed or reached their maturity date.