Cost based pricing refers to pricing methods of fixing the selling price of a good based on it's cost and a predetermined element of the profit margin. The company’s costs usually are of two forms: fixed and variable. Fixed costs, also termed as overhead costs would not vary with the level of sales or production. On the contrary, the variable costs would vary directly with the production level. The total costs of the fixed and variable with an addition of a % markup will make a full cost pricing for the company. The company may also use direct cost pricing wherein it adds a variable costs with a % markup. The latter is applied only during the periods when there is high competition because it causes a loss in the long run
What is crossed-based pricing? How do companies use fixed and variable costs in cost-based pricing models?
What is CAPM (Capital Assets Pricing Model) and how do companies make financial decisions based on it?
For cost-based pricing in multiple-product companies, which of the following is most likely to be used as a cost basis? a)Unit and administrative level costs b)Only product level costs. c)Only variable manufacturing costs d)Unit and batch and product level costs.
How do total variable costs, total fixed costs, average variable costs, and average fixed costs react to changes in the cost driver?
What are flotation costs and how do companies make financial decisions based on it?
Consider the cost of a wedding reception. What costs are fixed? What costs are variable? What output measure did you use in classifying the costs as fixed or variable?
Business Costs Product or Period Cost Variable or Fixed Cost Per Unit Cost (Variable) Annual Cost (Fixed) Artist - contract Product Fixed $10,000 Artist - design fee Product Fixed $3,600 Computer/Printer 90% Product Fixed $5,400 Computer/Printer 10% Period Fixed $600 Depreciation - Computer/Printer 90% Product Fixed $1,800 Depreciation - Computer/Printer 10% Period Fixed $200 Depreciation - Heat Press Machine Product Fixed $1,500 Heat Press Machine Product Fixed $4,500 Liability Insurance Period Fixed $3,600 Mall Rent (Manufacutring) 90% Product Fixed $27,000...
please answer all 3 multiple choice questions Identify a true statement about cost-based pricing. a. The markup percentage used in cost-based pricing includes only the desired profit. O b. Cost-based pricing is used only by manufacturing and trading companies. c. Cost-based pricing requires an approximate estimate of the cost for pricing a product. d. An appropriate markup percentage is always required in cost-based pricing. When managers consider a product mix, O a. they must choose the alternative that minimizes sales...
7. Cash flows from operations: What are variable costs and fixed costs? Variable costs are costs that vary directly with the number of units sold. Fixed costs are costs that do not vary directly with the number of units sold. What are some examples of each? Variable costs: Labor, materials, shipping costs and sales and marketing. -Fixed costs: Administrative costs, warehouse space, salaries. How are these costs estimated in forecasting operating expenses? 8. Cash flows from operations: When forecasting operating...
Relevant costs for target pricing are ________. A) variable manufacturing costs B) variable manufacturing and variable nonmanufacturing costs C) all fixed costs D) all future costs, both variable and fixed
Support Cost-Based Pricing and Markups with Variable Costs Compu Services provides computerized inventory consulting The office and computer expenses are $625,000 annually and are not assigned to specific jobs. The consulting hours available for the year total 20,000, and the average consulting hour has $30 of variable costs (a) If the company desires a profit of $100,000, what should it charge per hour? Round to the nearest cent s 66.25 (b) What is the markup on variable costs if the...