Using cost plus pricing,what is the price if ATC = $14.50 and the target rate of return is 4 percent?
A)$15.10
B)$49.34
C)$14.5
D)$22.10

Question

Quizplus · Accepted Answer

Cost plus pricing approach is given as: Price = ATC + (Mark-up percentage * ATC)
Given, ATC = $14.50 and target rate of return is 4%
Let's assume mark-up percentage as x.
4% = x/(1+x) *100
=> x = 3.85%
=> Mark-up percentage = 0.0385
Hence, Price = $14.50 + (0.0385 * $14.50) = $15.10
Therefore, the correct answer is (A).

Using Cost Plus Pricing,what Is the Price If ATC =