Markup equals
A) the difference between price and fully allocated average cost divided by the fully allocated average cost.
B) the difference between price and marginal cost divided by the marginal cost.
C) the difference between price and average variable cost divided by the average variable cost.
D) the difference between price and average fixed cost divided by the average fixed cost.

Question

Quizplus · Accepted Answer

Markup is calculated as the difference between the selling price of a good or service and its cost, divided by the cost. This is most accurately described by choice A, where it is defined as the difference between the price and the fully allocated average cost (which includes both variable and fixed costs), divided by the fully allocated average cost. This measure is commonly used to determine pricing strategies and understand profitability.

Markup Equals