When estimated costs are used in applying the cost-plus approach to product pricing, the estimates should be based on normal levels of performance.

Question

Quizplus · Accepted Answer

When using the cost-plus approach to product pricing, the estimated costs should be based on normal levels of performance, rather than on exceptional or abnormal levels. This will help ensure that the pricing is fair and reasonable, taking into account the expected costs of producing the product at a typical level of efficiency and productivity.

When Estimated Costs Are Used in Applying the Cost-Plus Approach