The correct answers are: It is simple and easy to use; The mark-up can be varied.

It is simple and easy to use. The same can be said of full cost plus pricing.

The mark-up can be varied. It can therefore be adjusted to reflect demand conditions.

Although the size of the mark-up can be varied in accordance with demand conditions, it is not a method of pricing which ensures that sufficient attention is paid to demand conditions, competitors’ prices and profit maximisation.

It ignores fixed overheads in the pricing decision. This is a drawback because the price must be high enough to ensure that a profit is made after covering fixed costs.