When goods are sent to the branch at cost plus mark-up, it means that the branch should sell at
Answer Details
When goods are sent to the branch at cost plus mark-up, it means that the branch should sell the goods at a price that is equal to the cost price plus a certain percentage of mark-up. The mark-up is added to the cost price to allow the branch to make a profit on the sale of the goods.
For example, if the cost price of the goods is $100 and the mark-up is 20%, the branch should sell the goods at a price of $120 ($100 + 20% of $100). This ensures that the branch covers the cost of the goods and also earns a profit on the sale.
Selling the goods at a price above or below the stipulated price or any price but not below the transfer price would not be in line with the cost plus mark-up pricing strategy. This strategy is designed to ensure that the branch makes a profit on the sale of the goods while also being able to cover the cost of the goods.