Consider a company manufacturing engine parts. The management reviews a proposal for production of…

Consider a company manufacturing engine parts. The management reviews a proposal for production of a newly designed engine part. The information includes various cost estimates provided by the accounting department, regarding the cost of labor, material, overhead, and other cost components of the new part, based on past costs incurred in production of its existing product line. The management used the cost information to estimate the expected cost per unit for the new engine part, added a 20% mark-up, and thus determined the selling price of the newly designed engine part. What approach was used by the management in determining the selling price?