Editing Cost-plus pricing (section)

==Mechanics==
The three stages of computing the selling price are computing the total cost, computing the unit cost, and then adding a markup to generate a selling price (refer to Fig 1). 
[[File:Cost-plus pricing steps.png|thumb|440x440px|'''Fig 1:''' ''Cost-plus pricing steps''|none]]

'''Step 1: Calculating total cost'''

''Total cost = fixed costs + variable costs'' 

Fixed costs do not generally depend on the number of units, while variable costs do. 

'''Step 2: Calculating unit cost'''

''Unit cost = (total cost/number of units)'' 

'''Step 3a: Calculating markup''' '''price'''

''Markup price = (unit cost * markup percentage)'' 

The markup is a percentage that is expected to provide an acceptable rate of return to the manufacturer.<ref name="SudhirJain_ME_2009" />

'''Step 3b: Calculating Selling Price (SP)'''

''Selling Price = unit cost + markup price''