ACCA Applied Skills · Performance Management · Pricing decisions
Which of the following is an advantage of cost-plus pricing?
Cost-plus pricing is simple and quick to apply, making it useful for jobbing or contract work and for pricing many products. It does not consider demand, elasticity or competitors, and fixed costs are recovered only if budgeted volumes are actually sold.
- AIt is simple to apply and quick for pricing many products or one-off jobsCorrect
- BIt takes account of customer demand and price elasticity
- CIt automatically considers competitors' prices
- DIt ensures that fixed costs are recovered at any sales volume
Explanation
Cost-plus pricing is straightforward and useful for contract or jobbing work where prices must be justified from costs. It ignores demand and competitor prices, and fixed costs are only recovered if budgeted volume is achieved, so the other options are wrong.
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