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Is it legal or rightful to use current material market price as cost of material in pricing a product?

Trying to understand if such strategy exist or used in business. Are there agencies or group monitoring such pricing method? When a manufacturer for example, acquire raw materials and receives that in the inventory normally calculates the landed cost. Pricing the finished product means adding markup to the bill of materials. What if, let us say that instead of the present cost of raw materials, you have used the present market value. Is it legal or a malpractice in the business or is it the business owner's rights.

Public Comments

1. In a free market, you can base your selling price on whatever you want, including what the price of cottage cheese at the grocery store. Unless it is regulated in some way, you can charge whatever the market will bear. There are plenty of name brand "designer" pieces of crap that are made in third world countries for pennies, that get sold for several hundred dollars to foolish, materialistic people. The manufacturing cost of most products is only a tiny part of the equation. Marketing and transportation cost is often many multiples of the production cost. How much do you think it costs to "make" a plastic bottle of water that gets sold for $1 ?? about 2c ? Business want PROFITS. As much as the market will allow.
2. To correctly state your cost of a product, you would not want to use market price at all. That would mess your books up completely and you would have no idea what your actual costs are. We're just talking simple accounting rules here. You may however, periodically re-appraise the value of your raw goods in stock or inventory. I would do this only with supervision from your CPA or other accounting/tax professional. Now, that has nothing to do with the actual sales price of the product. That's a different topic and you can sell the product for whatever you wish.