When Determining the Markup to Be Used in a Cost-Plus

question 50

Multiple Choice

When determining the markup to be used in a cost-plus pricing formula, many companies base the markup on a target:

• A) return on investment.
• B) sales margin.
• C) capital turnover.
• D) earnings per share.
• E) debt-to-equity ratio.

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Definitions:

Taxable

Subject to taxation; refers to income, assets, or financial transactions that are liable to be taxed by governmental jurisdictions.

Prior Service Cost

This is the cost of retroactive benefits granted to employees in a defined benefit plan amendment, to be recognized over future periods.

Retroactive Benefits

Retroactive benefits refer to payments or compensations provided for a period before the benefits were approved or a claim was settled.

Actuarial Present Value

Actuarial Present Value is the calculation of the current value of future cash flows or payments, taking into account factors such as mortality rates and interest.