Identify a true statement about cost-based pricing. a. An appropriate markup percentage is always required in cost-based pricing. b. Cost-based pricing requires an approximate estimate of the cost for pricing a product. c. Cost-based pricing is used only by manufacturing and trading companies. d. The markup percentage used in cost-based pricing includes only the desired profit.

Question

Business

Asa Schultz

2 April, 01:29

Identify a true statement about cost-based pricing. a. An appropriate markup percentage is always required in cost-based pricing. b. Cost-based pricing requires an approximate estimate of the cost for pricing a product. c. Cost-based pricing is used only by manufacturing and trading companies. d. The markup percentage used in cost-based pricing includes only the desired profit.

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Cassandra Chandler · Answer 1

a. An appropriate markup percentage is always required in cost-based pricing.

Explanation:

Under cost based pricing, the proper cost of manufacturing each product is identified and then the expected profit is added to get the selling price.

Basically it is a strategy to control cost prices and not adjusting and earning the desired profit.

As for example, if the net estimated cost of a product = $100

And the manufacturer wants to earn a profit of $20 then, he will add this profit margin as 20% on cost to get the selling price.

= $100 + 20% = $120