Which term describes a model in which final sale price is based on the cost to produce the product plus a small markup?

Which term describes a model in which final sale price is based on the cost to produce the product plus a small markup?

• A. A shared, unalterable ledger used to record transactions and track assets through a supply chain or business network.
• B. A long-term agreement in which a dealer or manufacturer loans goods to a retailer.
• C. Model in which final sale price is based on the cost to produce the product plus a small markup.
• D. A premium price paid for selecting stones from a parcel.

Answer: (C)

Cost-plus pricing is the model where the final sale price is determined by adding a small markup to the cost of producing the product. This approach centers on ensuring the price covers all production costs and yields a predictable profit margin, with the markup usually expressed as a percentage or fixed amount added on top of cost. It’s a straightforward, cost-driven method that doesn’t depend on demand, market trends, or perceived value in the customer’s eyes. The other options describe different business practices or pricing nuances (a ledger for tracking transactions, a consignment arrangement, or a premium for selecting stones from a lot) rather than a general pricing method. So the term that fits is cost-plus pricing.

Cost-plus pricing is the model where the final sale price is determined by adding a small markup to the cost of producing the product. This approach centers on ensuring the price covers all production costs and yields a predictable profit margin, with the markup usually expressed as a percentage or fixed amount added on top of cost. It’s a straightforward, cost-driven method that doesn’t depend on demand, market trends, or perceived value in the customer’s eyes. The other options describe different business practices or pricing nuances (a ledger for tracking transactions, a consignment arrangement, or a premium for selecting stones from a lot) rather than a general pricing method. So the term that fits is cost-plus pricing.