Harris Company produces a product whose cost is $10.Assuming the company uses a cost-plus pricing system,what selling price would the company set to earn a profit margin of 20% of cost?
A) $2.00
B) $12.50
C) $50.00
D) $12.00

Question

Quizplus · Accepted Answer

To earn a profit margin of 20% of cost, the company needs to add 20% of the cost to the cost itself to get the selling price. So, 20% of $10 is $2. Therefore, the selling price would be $10 + $2 = $12. Therefore, the correct answer is option D.

Harris Company Produces a Product Whose Cost Is $10