COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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1 only
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2 only
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Neither 1 nor 2
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Both 1 and 2
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Detailed explanation-1: -Cost-plus pricing is also known as markup pricing. It’s a pricing method where a fixed percentage is added on top of the cost it takes to produce one unit of a product (unit cost). The resulting number is the selling price of the product.
Detailed explanation-2: -Cost Plus Pricing is also referred to as Markup Pricing. Markup pricing or cost-plus pricing is a pricing strategy where the price of a product or service is calculated by adding together the cost of the products and a percentage of it as markup.
Detailed explanation-3: -Cost-plus pricing is a pricing strategy by which the selling price of a product is determined by adding a specific fixed percentage (a “markup") to the product’s unit cost. Essentially, the markup percentage is a method of generating a particular desired rate of return.
Detailed explanation-4: -A simple formula is cost-plus pricing = break-even price * profit margin goal. Break-even price is the total cost to the firm of producing the product or service. Profit margin goal is the firm’s desired/expected profit level. Multiply the cost to provide a service by the desired profit margin.