Cost-Plus-Percentage-Of-Cost Pricing Refers to

question 136

Multiple Choice

Cost-plus-percentage-of-cost pricing refers to

• A) summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price.
• B) adding a fixed percentage to the cost of all items in a specific product class.
• C) setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.
• D) setting the price of a product or service by adding a fixed percentage to the total unit cost.
• E) charging different prices to different buyers for goods of like grade and quality.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or the volume of services rendered, such as raw materials and direct labor.

Fixed Costs

Costs that remain constant regardless of the amount of products or services a company generates, including expenses like lease payments, wages, and premiums.

Break-even Point

The volume of production or sales at which total revenues equal total costs, resulting in neither profit nor loss.

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor.