Discuss the disadvantages of cost-plus pricing


A company must incur annual fixed costs of $4,000,000 and variable costs of $400 per unit and estimates that it can sell 40,000 pumps annually and marks up cost by 30%. Using cost-plus pricing, what is the cost per unit and the price? What are disadvantages of cost-plus pricing?

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Accounting Basics: Discuss the disadvantages of cost-plus pricing
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