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Hello sir! These statements are from Kaplan example these are FALSE statement they have not given explanation ..
can you please explain me
1) cost-plus pricing is a strategically focused approach as it account for external factor
2) cost -plus pricing requires that a profit markup applied by an organisation is fixed .And also this one statement was true
Full cost plus pricing requires the budgeted level of output to be determined at outset …. is this because of the absorption costing???
1 is false because it dos not account for any external factors (it does not take account of competitors or of the affect of the selling price on the level of demand).
2 is false because it is up to the company to decide what mark-up they want to apply to each of their products.
3 is true because for full cost pricing we need to absorb the fixed overheads which needs knowing the budgeted production.
I do suggest that you watch my free lectures on pricing. The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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