In a cost-plus approach to pricing:

Multiple Choice

• there is an inverse relationship between the magnitude of the cost basis and the markup percentage.

• there is a direct relationship between the magnitude of the cost basis and the markup percentage.

• the cost basis used must include fixed manufacturing overhead.

• "plus" refers to the addition of allocated administrative overhead to the direct manufacturing costs.

• "plus" refers to the addition of allocated fixed manufacturing overhead to the variable manufacturing costs.