One Method of Setting Price Using the Cost-Plus Method Is

question 48

Multiple Choice

One method of setting price using the cost-plus method is to add

• A)a given percentage of marginal cost to marginal cost of production.
• B)a given percentage of fixed cost to total fixed cost.
• C)a given percentage of average total cost to average total cost.
• D)a given percentage of average variable cost to average total cost.

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Definitions:

Direct Labor Cost

The compensation and associated costs for workers directly engaged in the manufacturing of products or services.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries of supervisors.

Total Manufacturing Costs

The sum of direct materials, direct labor, and manufacturing overhead incurred in producing goods.

Direct Labor Cost

The wages and salaries paid to employees who are directly involved in producing goods or providing services.