Topic > The Role of Management Accounting - 2137

The first method is called cost-plus pricing; the company should know the full cost of the product, then plus the markup. Cost-plus pricing applies to customized products/services. Cost-plus pricing also applies to non-personalized products, but there is a risk. The company cannot know the demand for non-customized products, the company uses demand approximations to price the products. If the actual demand does not match the approximation, the result of cost-plus pricing is not reliable. So the limitation of cost-plus pricing is that the technique ignores demand. There is a cost-plus pricing limitation, but the technique is very useful. Drury (2012) stated that cost-plus pricing can encourage price stability because this way the company can predict the price of other companies. And this method is simple; this method can be widely