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

question 28

Multiple Choice

What cost concept used in applying the cost-plus approach to product pricing includes only total manufacturing costs 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:

Excess Amortizations

The amount by which amortization expense exceeds the amount necessary to amortize the cost of a tangible or intangible asset over its useful life.

Intra-Entity Asset Transfers

Transactions involving the transfer of assets or services between divisions or subsidiaries within the same entity, which may need to be adjusted for in consolidated financial reporting.

Depreciation Purposes

The allocation of the cost of an asset over its useful life for accounting and tax purposes.

Consolidation Worksheet

A tool used in accounting to combine the financial statements of a parent company with those of its subsidiaries, enabling a clearer overall financial picture.