Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price is referred to as _________.
A)standard markup pricing
B)experience curve pricing
C)cost-plus pricing
D)product-line pricing
E)target return-on-investment pricing

Question

Quizplus · Accepted Answer

Cost-plus pricing involves adding a markup to the total unit cost to arrive at the price. This markup is usually a percentage of the cost or a fixed amount that covers overhead and profit. It is a common pricing strategy used by businesses to ensure they cover their costs and make a profit on each sale. Therefore, option C is the correct answer. Option A (Standard Markup pricing) is partially correct but does not include the fact that costs are added to the pricing. Option B (Experience curve pricing) is incorrect as it is a strategy where prices are lowered as production increases, and unit costs decrease. Option D (Product-line pricing) is incorrect as it is a strategy where products are priced differently within the same product line. Option E (Target return-on-investment pricing) is incorrect as it is a strategy where prices are set based on the desired return on investment.

Summing the Total Unit Cost of Providing a Product or Service