Question

With reference to the ‘Cost Plus Pricing’, which statement(s) is/are correct?

1. Selling price of the product must cover full cost.
2. Selling price must cover full cost and yield a reasonable margin of profit.
3. Selling price should be high to get more profit.
4. Selling price should be low, so cost could be covered.

Options

• 1 & 3 are correct.

• 2 & 3 are correct.

• 1 & 4 are correct.

• Only 2 is correct.

Answer 1

Only 2 is correct.

Explanation:

Option 2 explains the full concept of cost-plus pricing. This approach involves determining the selling price by adding an appropriate profit margin to the cost, assuring cost recovery while being profitable.