When goods are sent to the branch at cost plus mark-up, it means that the...
FINANCIAL
JAMB 2016
When goods are sent to the branch at cost plus mark-up, it means that the branch should sell at
- A. a price above or below the stipulated price
- B. any price but not below the transfer price
- C. cost price
- D. a price that is equal to the mark-up
Correct Answer: B. any price but not below the transfer price
Explanation
Cost-plus pricing is a pricing strategy in which the selling price is determined by adding a specific amount markup to a product's unit cost. Cost plus pricing involves adding a markup to the cost of goods and services to arrive at a selling price. Under this approach, you add together the direct material cost, direct labor cost, and overhead costs for a product, and add to it a mark-up percentage in order to derive the price of the product.
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