A firm that uses the product cost plus a target markup percentage to calculate the sales price is using:
A) cost-based pricing.
B) expense pricing.
C) discount pricing.
D) fixed expense pricing.

Question

Quizplus · Accepted Answer

Cost-based pricing involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk. A firm using product cost plus a target markup percentage to calculate the sales price is indeed applying cost-based pricing.

A Firm That Uses the Product Cost Plus a Target