What is crossed-based pricing? How do companies use fixed and variable costs in cost-based pricing models?
Homework Answers
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
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What is crossed-based pricing? How do companies use fixed and
variable costs in cost-based pricing models?
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What is CAPM (Capital Assets Pricing Model) and how do companies make financial decisions based on it?
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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?
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please answer all 3 multiple choice questions Identify a true statement about cost-based pricing. a. The...
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...
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...
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Support Cost-Based Pricing and Markups with Variable Costs Compu Services provides computerized inventory consultin...
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...
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...
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...
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