Richard asked the following two questions: 1 How do firms treat fixed costs when using cost plus or mark up pricing? 2 Is there a difference between fixed costs and overheads in Biz Studies. I now I should know but me and accounts have never met :) I answered as follows: If anyone is using cost plus pricing, there is a very good chance that they have no idea what there fixed costs are. One of the huge appeals of cost plus pricing is that it appeals to the idle or those who don't analyse their costs very well. Otherwise, fixed costs are simply added to the variable costs to comprise total costs and then apply the formula: Total costs Plus profit Equals selling Price That's it, whether you call it cost plus or mark up pricing. Overheads can be fixed or variable! Take a look at Classification of Costs at duncanwil.co.uk and appreciate that overheads and factory expenses are synonyms. Even on my own page I use the word overhead in a slack manner but essentially they are FACTORY overheads oka the total indirect costs of materials, labour and expenses. If you need more, I have scads in this area, as you might imagine. A big mistake is to call administration, marketing, research, finance etc costs by the name overhead when they aren't: although modern usage will scream that they are. You MIGHT find this page useful, too, but you have to work through it to get the answers! Cost Accounting Case for Beginners at duncanwil.co.uk DW