Which of the following best explains mark-up pricing?
A) A particular profit margin is added to some costs, including the cost of sales.
B) A particular profit margin is added to all costs, including the cost of sales.
C) A fixed percentage mark-up is added to the cost price.
D) A 5% profit margin is added to the cost of sales.

Question

Which of the following best explains mark-up pricing? 
A) A particular profit margin is added to some costs, including the cost of sales. 
B) A particular profit margin is added to all costs, including the cost of sales. 
C) A fixed percentage mark-up is added to the cost price. 
D) A 5% profit margin is added to the cost of sales.

Quizplus · Accepted Answer

Markup pricing involves adding a fixed percentage mark-up to the cost price of a product or service to arrive at the selling price. This means that the profit margin may vary depending on the cost of goods sold, but the percentage markup remains fixed. Option A and B describe variable markup pricing, where the profit margin added varies based on different costs. Option D describes a specific profit margin, but it is not necessarily a mark-up and its percentage is not fixed.

Which of the Following Best Explains Mark-Up Pricing