A Local Apparel Shop Sets Prices by Adding a 45

question 179

Multiple Choice

A local apparel shop sets prices by adding a 45 percent markup to the invoice price charged by the supplier.This method of pricing is known as _____ pricing.

• A)cost-plus
• B)breakeven
• C)full-cost
• D)incremental-cost

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Definitions:

ABC

Activity-Based Costing, a method that allocates overhead and indirect costs to related products and services based on their usage.

Support Department Costs

Expenses related to departments that do not directly contribute to the production of goods or services but provide necessary support, such as IT and HR.

Support Activity Costs

Expenses related to functions that assist the core operations of a business, such as human resources or accounting, which do not directly contribute to the production of goods or services.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on the activities they require.