In cost-plus pricing, the 'plus' refers to a component named as ___________?
Correct answer: B. markup
- A. off shore cost
- B. markup
- C. sunk cost
- D. outsource costAccounting & Auditing
Explanation
Cost-plus pricing begins with a cost base and adds a markup to provide the desired profit. Sunk cost is a past cost that cannot be changed, so it is not the “plus” component.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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