Camden Company sets the selling price for its product by adding a markup to the product's variable manufacturing costs.This approach to pricing is referred to as:
A) cost-plus pricing
B) target pricing
C) target costing
D) contribution margin-based pricing

Question

Quizplus · Accepted Answer

Cost-plus pricing involves adding a markup to the product's variable manufacturing costs to determine the selling price. This approach ensures that the company covers its costs and earns a profit. Target pricing focuses on setting a price based on the market demand and competitors' prices, while target costing involves determining the maximum cost that can be incurred to meet the desired profit margin for a product. Contribution margin-based pricing involves setting a price based on the product's contribution margin, which is the difference between the selling price and variable costs.

Camden Company Sets the Selling Price for Its Product by Adding