What price will the company charge if the firm uses cost-plus pricing based on absorption cost and a markup percentage of 120%?
A)$420.
B)$459.
C)$594.
D)$672.
E)Some other amount.

Question

Quizplus · Accepted Answer

Cost-plus pricing involves adding a markup percentage to the cost of producing a product. If the absorption cost is $270, a 120% markup would be $270 * 1.2 = $324. Adding this to the original cost gives $270 + $324 = $594.

What Price Will the Company Charge If the Firm Uses