Cost-Plus Method Is Most Appropriate When

question 49

Multiple Choice

Cost-plus method is most appropriate when:

• A) there are comparable uncontrolled sales and the related buyer merely distributes the goods it purchases.
• B) the related buyer acts as a sales subsidiary.
• C) the related buyer does not add substantial value to the product.
• D) the related buyer does more than simply distribute the goods it purchases.

---

Definitions:

Break-Even Point

The point at which total costs equal total revenue, meaning there is no net loss or gain.

Variable Costs

Costs that vary in proportion with the level of goods or services produced or sold.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Break-Even Point

The sales level at which total revenues equal total costs, resulting in no profit but no loss.