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John Moffat.
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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Cost plus pricing
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.
Thankyou so much sir ! You explain everything so well
You are welcome 🙂