A product costs $100 to manufacture and $40 to market and $20 to distribute (ship to customers.) R&D costs are allocated at $30 per unit. Based on a targeted rate of return, manager uses a mark-up of 60%. What is the markup component based on a Cost-Plus pricing approach?
A) $60
B) $84
C) $96
D) $114

Question

Quizplus · Accepted Answer

The cost base is the full cost. The full cost is $190 x 1.6 = $304 therefore the markup component is $114.

A Product Costs $100 to Manufacture and $40 to Market