Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 41

The firm in 13-19 above ignores competitive prices because it has a differentiated product. It uses full-cost-based pricing with a 40 percent markup. What is the firm’s price?

Step 1 of 4

“The full manufacturing cost plus a markup is the most common form of pricing where a fixed percentage is added on the total manufacturing cost for the unit price of a product.

Thus the formula for determination of the firm price can be defined as below:

.

This pricing strategy ignores the customer demand and also the competitor prices. It is often used by retailers for pricing their products.”