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Hi John,
Need your explanation please on each of the 4 options below as I am getting confusing views in Kaplan study notes.
Which of the following statements regarding cost-plus pricing strategies are correct?
1. Marginal cost plus pricing is easier where there is a readily identifiable variable cost
2. Full cost plus pricing requires the budgeted level of output to be determined at the outset
3. Cost plus pricing is a strategically focussed approach as it accounts for external factors.
4. Cost plus pricing requires that the profit mark-up applied by an organisation is fixed.
Regards,
NitinHave you watched my free lectures on this?
1 Is not correct – it is no easier and no harder
2 is correct – they need the budgeted production in order to calculate the absorption rate for fixed overheads.
3 is not correct – it does not account for external factors
4 is not correct because they can use different mark-ups for different products
If you are watching my free lectures then the only extra book that you need is a Revision Kit. The lectures are a complete free course and cover everything needed to be able to pass the exam well. The Revision Kit has lots of exam standard questions to practice, and practice is vital to passing the exam. (Even if you choose not to watch my lectures, you must buy a Revision Kit from one of the aCCA approved publishers.)
Thanks John. I am of course watching your lectures and reached up to chapter 9. Will cover the remaining by the end of next week.
Will have a look at the revision kit soon.
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