When using the absorption approach to cost-plus pricing described in the text:
A)all costs are included in the cost base.
B)the "plus" or markup figure contains fixed costs and desired profit.
C)the cost base is made up of the unit product cost.
D)only selling and administrative expenses are included in the cost base.

Question

Quizplus · Accepted Answer

The absorption approach to cost-plus pricing uses the unit product cost as the cost base, which includes all manufacturing costs (both fixed and variable) associated with producing a product.

When Using the Absorption Approach to Cost-Plus Pricing Described in the Text