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Cost plus pricing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Cost plus pricing

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • June 26, 2021 at 7:06 pm #626401
    sadafwaheed1
    • Topics: 79
    • Replies: 29
    • ☆☆

    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???

    June 27, 2021 at 8:12 am #626429
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49600
    • ☆☆☆☆☆

    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.

    June 27, 2021 at 8:32 am #626438
    sadafwaheed1
    • Topics: 79
    • Replies: 29
    • ☆☆

    Thankyou so much sir ! You explain everything so well

    June 27, 2021 at 8:57 am #626441
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49600
    • ☆☆☆☆☆

    You are welcome 🙂

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