What cost concept used in applying the cost-plus approach to product pricing includes only total manufacturing costs in the "cost" amount to which the markup is added?
A) Variable cost concept
B) Total cost concept
C) Product cost concept
D) Opportunity cost concept

Question

Quizplus · Accepted Answer

The product cost concept includes only the total manufacturing costs in the "cost" amount to which the markup is added. This approach is useful when determining the minimum price at which a product should be sold to cover all direct manufacturing costs and provide a reasonable profit margin. The variable cost concept includes only variable costs, while the total cost concept includes both variable and fixed costs. The opportunity cost concept considers the cost of forgoing the next best alternative, rather than focusing solely on manufacturing costs.

What Cost Concept Used in Applying the Cost-Plus Approach to Product