Appstate sells bean mixes for soups. The company makes 2,000 packages per day. The total variable cost for making one bag for bean soup is $3. The average fixed cost per bag is $.90. The company charges $6.50 per bag in order to earn a 67 percent profit on each bag of bean mix. What method of pricing is Appstate using?

Question

Quizplus · Accepted Answer

Appstate is using cost-plus pricing, which involves adding a markup to the cost of goods to determine the selling price. In this case, they calculate their costs (variable plus fixed) and add a profit margin to set the price at $6.50 per bag.

Appstate Sells Bean Mixes for Soups