Consider the following statements regarding cost-plus pricing formulas.
i. Full cost pricing formulas have the advantage of keeping the manager's attention focused on covering total costs.
ii. With cost-plus pricing formulas, management must consider market conditions and likely actions of competitors.
iii. Variable cost-plus formulas have the advantage of not obscuring important information about cost behaviour.
Which of the above statements is/are true?

Question

Quizplus · Accepted Answer

All the statements are true. Statement i highlights the focus on covering total costs in full cost pricing. Statement ii emphasizes the need to consider market conditions and competitor actions in cost-plus pricing. Statement iii points out the advantage of variable cost-plus formulas in providing clear information about cost behavior.

Consider the Following Statements Regarding Cost-Plus Pricing Formulas