In a cost-plus approach to pricing:
A) there is an inverse relationship between the magnitude of the cost basis and the markup percentage.
B) there is a direct relationship between the magnitude of the cost basis and the markup percentage.
C) the cost basis used must include fixed manufacturing overhead.
D) "plus" refers to the addition of allocated administrative overhead to the direct manufacturing costs.
E) "plus" refers to the addition of allocated fixed manufacturing overhead to the variable manufacturing costs.

Question

Quizplus · Accepted Answer

In a cost-plus pricing approach, as the cost basis increases, the markup percentage typically decreases to maintain competitive pricing, indicating an inverse relationship.

In a Cost-Plus Approach to Pricing