Cost-Plus Pricing Refers to

question 126

Multiple Choice

Cost-plus pricing refers to

• A)setting the price of a line of products at a number of different price points.
• B)adding a fixed percentage to the cost of all items in a specific product class.
• C)summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price.
• D)setting prices to achieve a profit that is a specified percentage of the sales volume.
• E)increasing the price slightly to protect against undue profit losses from unforeseen environmental factors.

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Definitions:

Equivalent Units

A method used in cost accounting to express the amount of work done by incomplete units in terms of fully completed units.

Processing Department

A division or area in a manufacturing facility where a specific type of processing or production occurs.

Total Cost Transferred

The aggregate cost of goods or services moved from one stage of production to another, or from production to finished goods, within a given period.

Conversion Costs

The combined costs of direct labor and manufacturing overheads that are incurred to convert raw materials into finished goods.