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Sakshi Dhakate
on Dec 17, 2024

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In using the variable cost method of applying the cost-plus approach to product pricing, fixed manufacturing costs and fixed selling and administrative expenses must be covered by the markup.

Variable Cost Method

A cost-plus method of pricing setting in which only the variable costs are included in the cost amount to which the markup is added.

Fixed Manufacturing Costs

Expenses that do not change with the level of production, such as rent, salaries of permanent employees, and depreciation of factory equipment.

Markup

The extra charge added to the purchasing cost of items to encompass both overhead expenses and profit, setting the sale price.

  • Acquire knowledge on various approaches to product pricing, like cost-plus and variable costing techniques.
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Diana SalazarDec 22, 2024
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