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: Option B
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 materialcost, direct labor cost, and overhead costs for a product, and add to it a markuppercentage in order to derive the price of the product.