Cost plus markup pricing also could lead to an irrational pricing policy, if the price is based on total average cost as opposed to direct product cost.

Question

Quizplus · Accepted Answer

If the price is based on total average cost, it includes all indirect costs, such as overhead expenses, which may not be directly related to the production of the product. This can result in an irrational pricing policy as the pricing may not reflect the true cost of the product.

Cost Plus Markup Pricing Also Could Lead to an Irrational