Is it correct that cost plus pricing is the approach to calculate the selling price by estimating cost per unit of a production and add appropriate percentage mark-up.
Cost plus pricing is divided into 3 approach:
1) Full cost plus pricing:
We include all the variable & fixed production costs in our calculation to calculate the reasonable selling price.
2) Marginal cost plus pricing:
We include only marginal or variable production costs in our calculation to calculate the reasonable selling price.
3) Opportunity cost plus pricing:
We include only variable cost plus opportunity cost foregone in our calculation to calculate the reasonable selling price.
My first question is that all of these approaches used to find out the reasonable selling price only? There is not much we could be asked on this in exam.
Secondly I could not find any example which includes opportunity cost in ur lecture. Could u please give me an example?
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Pricing approach
4y ago
4y ago#1There is not much that can be asked on cost plus pricing (but obviously a lot of other things that can be asked about pricing).
Opportunity cost plus pricing is relevant for 'one-off' contracts and is explained in my lectures on relevant costing.
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