In a Cost-Based Pricing System, the Markup Should Cover

question 54

Multiple Choice

In a cost-based pricing system, the markup should cover

• A) selling and administrative expenses, desired profit, and manufacturing cost
• B) selling and administrative expenses and desired profit only
• C) selling and administrative expenses and manufacturing cost only
• D) desired profit and manufacturing cost only

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Definitions:

Job-Order Costing

An accounting method that assigns costs to individual jobs or batches, typically used in manufacturing on a per-order basis.

Manufacturing Overhead

All the indirect costs associated with the production process, such as the costs of utilities, maintenance, and factory equipment.

Cost of Goods Sold

The expenses directly associated with manufacturing the products a company sells, which cover both the materials and labor costs.

Balance Sheet

A financial statement that shows the assets, liabilities, and equity of a company at a specific point in time.