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When goods are sent to the branch at cost plus mark-up, it means that the...

Accounts - Principles of Accounts
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
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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.


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