When estimated costs are used in applying the cost-plus approach to product pricing, the estimates should be based on ideal levels of performance.

Estimated Costs

The anticipated expenses associated with a project or production, calculated before actual expenses are known.

Cost-Plus Approach

A pricing strategy where the selling price is determined by adding a specific markup to the cost of the product or service.

Ideal Levels

Optimal quantities or conditions that ensure the best performance, efficiency, or yield in various contexts such as inventory, production, and staffing.