Patterson and Clay Companies Both Use Cost-Plus Pricing Formulas and Arrived

question 13

Multiple Choice

Patterson and Clay Companies both use cost-plus pricing formulas and arrived at a selling price of $1,000 for the same product. Patterson uses absorption manufacturing cost as the basis for computing its dollar markup whereas Clay uses total cost. Which of the following choices correctly denotes the company that would have (1) the higher cost basis for deriving its dollar markup and (2) the higher markup percentage respectively?

• A)Patterson, Patterson.
• B)Patterson, Clay.
• C)Clay, Patterson.
• D)Clay, Clay.
• E)The companies would have the same cost basis and markup percentage.

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Definitions:

Engagement Strategy

A plan aimed at increasing involvement and interaction between an organization and its stakeholders or customers.

Multinational Organizations

Companies or businesses that operate in multiple countries, managing production or delivering services in more than one country.

Global Stakeholders

are individuals, groups, or organizations worldwide that have an interest in or are affected by the actions of a business or project.

Relational Approach

A method focusing on building long-term relationships and engagement with customers or stakeholders rather than transactional interactions.