A method to establish the selling price of a product or service by estimating the total cost and adding a percentage mark-up to achieve a profitable price.
Cost-plus transfer prices are set by cost-plus pricing, which includes a mark-up to provide a profit for the supplying division. This method incorporates variable costs and fixed costs for the purpose of setting a transfer price that includes a profit margin.
In management accounting, the principle that the management of an organization is likely to need different information, and thus different costs, for various activities it carries out, especially when making decisions.
