What Cost Concept Used in Applying the Cost-Plus Approach to Product

question 101

Multiple Choice

What cost concept used in applying the cost-plus approach to product pricing includes total manufacturing costs and total selling and administrative expenses in the "cost" amount to which the markup is added?

• A) Variable cost concept
• B) Total cost concept
• C) Product cost concept
• D) Opportunity cost concept

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Definitions:

Average Variable Cost

The sum of all variable production costs divided by the number of units produced.

Profit-Maximizing

The strategy or process by which a company determines the price and output level that generates the most profit.

Mutual Interdependence

A condition in which entities are mutually reliant on each other, commonly seen in markets where actions of one firm significantly affect others.

Price-Output Policies

Strategies employed by firms or governments to regulate prices and output levels in a market, often to promote competition or control inflation.