Which term refers to percentage applications above the general overhead and other indirect costs?

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Multiple Choice

Which term refers to percentage applications above the general overhead and other indirect costs?

Markup is the percentage added to cost to recover general overhead and other indirect costs and to provide profit. This percentage is applied to the cost base (direct costs plus overhead) to determine the selling price. That’s why it’s the right term: it represents the extra amount added on top of costs, not the final price itself, a contingency reserve, or the production process. For example, if total cost is 500 and the markup is 20%, the selling price becomes 600. Contingency is a reserve for unforeseen costs, production is the manufacturing process, and price is the final amount charged to customers after applying markup.

Markup is the percentage added to cost to recover general overhead and other indirect costs and to provide profit. This percentage is applied to the cost base (direct costs plus overhead) to determine the selling price. That’s why it’s the right term: it represents the extra amount added on top of costs, not the final price itself, a contingency reserve, or the production process. For example, if total cost is 500 and the markup is 20%, the selling price becomes 600. Contingency is a reserve for unforeseen costs, production is the manufacturing process, and price is the final amount charged to customers after applying markup.

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