A local apparel shop sets prices by adding a 45 percent markup to the invoice price charged by the supplier.This method of pricing is known as _____ pricing.
A)cost-plus
B)breakeven
C)full-cost
D)incremental-cost

Question

Quizplus · Accepted Answer

Cost-plus pricing is a method where a business adds a markup to the cost of producing or purchasing a product to determine the selling price. In this case, the local apparel shop is adding a 45 percent markup to the invoice price charged by the supplier, which makes it a clear example of cost-plus pricing.  Breakeven pricing is a method of setting prices to cover all costs and achieve a certain level of profit, while Full-cost pricing refers to pricing based on the total cost of production, including both fixed and variable costs. Incremental-cost pricing involves setting a price that covers only the variable cost of producing or purchasing an additional unit of product.

A Local Apparel Shop Sets Prices by Adding a 45