The pricing method that establishes selling prices based on a stipulated rate above total production costs is
A)return on assets pricing.
B)target cost pricing.
C)gross margin pricing.
D)time and materials pricing.

Question

Quizplus · Accepted Answer

Gross margin pricing establishes selling prices by adding a predetermined gross margin to the total production costs. This method is commonly used in retail and manufacturing industries. Option A is incorrect because return on assets pricing is based on the profit earned in relation to the assets invested. Option B is incorrect because target cost pricing determines the maximum cost that can be incurred for a product to achieve a desired profit margin. Option D is incorrect because time and materials pricing is used for billing clients based on the actual time and materials used for a project.

The Pricing Method That Establishes Selling Prices Based on a Stipulated