The cost-plus pricing approach's major advantage is
A)it considers customer demand.
B)that sales volume has no effect on per unit costs.
C)it is simple to calculate.
D)it can be used to determine a product's target cost.

Question

Quizplus · Accepted Answer

The cost-plus pricing approach is simple to calculate as it involves determining the actual cost of producing the product and adding a percentage markup to cover overhead costs and profit margin. This can be advantageous for small businesses or for products with relatively stable costs. However, it does not take into account customer demand or the effects of sales volume on per unit costs. It also cannot be used to determine a product's target cost, which is an important consideration for companies implementing target costing strategies.

The Cost-Plus Pricing Approach's Major Advantage Is