CMA Final · Strategic Cost Management · Pricing Decisions and Strategies
Sundaram Fabrics Ltd. uses a cost-plus pricing policy. For a batch of 2,000 units, the total cost is ₹6,00,000 and the firm wants a mark-up of 25% on cost. What is the selling price per unit?
The selling price is ₹375 per unit. Cost per unit is ₹300 (₹6,00,000 divided by 2,000 units), and a 25% mark-up on cost adds ₹75. A margin on sales would give ₹400, but the mark-up here is on cost.
- A₹375Correct
- B₹300
- C₹325
- D₹400
Explanation
Cost per unit = 6,00,000 / 2,000 = ₹300. Selling price = 300 x 1.25 = ₹375. The option ₹400 treats 25% as a margin on selling price (300/0.75), which is wrong because the mark-up is stated on cost.
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