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8 May, 09:41

How is price determined using cost-plus pricing? A. The price is set by determining the customer's value perceptions. B. The price is set based on demand. C. The price is set so that total revenue covers total costs. D. The price is set by adding a standard mark-up to the cost of the product. E. The price is set based on competitor's prices.

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  1. 8 May, 11:56
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    The correct answer is option D.

    Explanation:

    The cost-plus pricing is a method of price determination. The price is fixed by adding a standard markup to the cost of the product.

    We sum up the direct material cost, the labor cost and the overhead cost of a product. Then we add a certain percentage of markup to arrive at the selling price of the product.

    An alternative to cost-plus pricing is value-based pricing.
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