Which of the Following Items Are Included in Calculating the Markup

question 51

Multiple Choice

Which of the following items are included in calculating the markup percentage under the absorption approach to cost-plus pricing described in the text? $\quad$ $\quad$$\begin{array}{ccccc}\text { Variable Cost }& \quad\quad\quad\quad\quad\quad\text { Fixed Cost } & \quad\quad\quad\quad\text { Desired} \end{array}$
$\begin{array}{ccccc}\text { Production } & \quad\quad\quad\text { Selling } & \text { Production } & \text { Selling } &\quad \text { Profit } \end{array}$

A. $\quad$$\begin{array}{llcc}\text { Yes } &\quad\quad\quad\quad \text { No } &\quad\quad\quad \text { Yes } &\quad\quad \quad\text { No } &\quad \text { Yes } \end{array}$
B. $\quad$$\begin{array}{llcc}\text { No } & \quad\quad\quad\quad\text { Yes } & \quad\quad\quad\text { No } & \quad\quad\quad\text { Yes } &\quad \text { Yes } \end{array}$
C. $\quad$$\begin{array}{llcc}\text { No } & \quad\quad\quad\quad\text { No } & \quad\quad\quad\text { Yes } &\quad\quad\quad \text { Yes } & \quad\text { Yes } \end{array}$
D. $\quad$$\begin{array}{llcc}\text { No } &\quad\quad\quad\quad \text { Yes } &\quad\quad\quad \text { No } & \quad\quad\quad\text { Yes } & \quad\text { No }\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Materials Price Variance

The difference between the actual cost of materials purchased and the expected (standard) cost, indicating how material cost fluctuations affect production costs.

Quantity Standard

The expected or budgeted quantity regarding inputs or outputs, used as a performance measure or pricing basis.

Price Standard

A predetermined cost that represents what should be paid for a unit of input, such as materials or labor.

Materials Price Variance

Materials price variance is the difference between the actual cost of materials used in production and the standard cost expected, it can indicate changes in market prices or purchasing efficiency.