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Pratishtha Aggarwal posted an Question
May 06, 2022 • 17:40 pm 30 points
  • UGC NET
  • Commerce

43. which of the following statements regarding cost-plus pricing strategies are correct? (1) marginal cost-plus pricing is easier where there is a readily iden

43. Which of the following statements regarding cost-plus pricing strategies are correct? (1) Marginal cost-plus pricing is easier where there is a readily identifiable variable cost (2) Full cost-plus pricing requires the budgeted level of output to be determined at the outset (3) Cost-plus pricing is a strategically focused approach as it accounts for external factors (4) Cost-plus pricing requires that the profit mark-up applied by an organization is fixed (A) (1), (2) and (4) B) (1) and (2) only (C) (3) and (4) () and (3)

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  • Rucha rajesh shingvekar best-answer

    B As marginal costing is based on variable costs, it is easier when a readily identifiable variable cost has been established. The budgeted volume of output does need to be determined for full cost-plus pricing as it would be used to calculate the overhead absorption rate for the calculation of the full cost per unit. Cost-plus pricing is internally focused and a drawback of the technique is that it fails to consider external influences, like competitor pricing strategies. The mark-up percentage does not have to be fixed; it can vary and be adjusted to reflect market conditions.

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