In using the product cost method of applying the cost-plus approach to product pricing, selling expenses, administrative expenses, and profit are covered in the markup.

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Quizplus · Accepted Answer

In the product cost method of cost-plus pricing, the markup added to the product's cost typically covers not only the direct costs of producing the product but also an allocation for selling and administrative expenses, as well as a profit margin. This ensures that all costs are covered in the price, along with a profit.

In Using the Product Cost Method of Applying the Cost-Plus