...Introduction As the chairman of the evaluation panel for the $2,000,000, tower procurement, will use technical, cost, and price criteria to evaluate and determine the price reasonableness of vendors who propose on the requirement. This requirement has received adequate competition and will use a competitive range to increase the competitiveness of offeror’s proposals through negotiations. In determining price reasonableness, it will be critical to analyze the different methods of price analysis and determine if any benefit will arise from the use of these methods. Technical Evaluations The FAR expresses the government’s objective is to provide the best value product or service for customers, while maintaining the public’s trust and fulfilling policy objectives (Compton, 2010). “Proposing vendors are entitled to fair and impartial treatment in the source selection process, and they have a right to unbiased award decisions” (Compton, 2010, p. 142). Fair and impartial treatment is achieved in technical evaluations, by ensuring that technical proposals are evaluated in accordance with the evaluation criteria and requirements stated in Section M of the solicitation. Integrity and Fairness The Federal Acquisition Regulation (FAR) 1.102-2(c)(3), states that “The Government shall exercise discretion, use sound business judgment, and comply with applicable laws and regulations in dealing with contractors and prospective contractors” (Broaddus, 2011). There are many rules...
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...The main costs associated with the production of VectorCal’s drone navigation system are the labor cost and material cost. VectorCal’s drone navigation system has two types of labor cost, direct labor and indirect labor. Direct labor cost is wages that are incurred in order to produce specific goods or provide specific services to customers. It also includes the payroll taxes associated with those wages, plus the cost of company paid medical insurance, life insurance, workers' compensation insurance, any company matched pension contributions, and other company benefits (Adams, 2014). Indirect labor is the cost of any labor that supports the production process, but which is not directly involved in the active conversion of materials into finished products. Indirect labor cost would include production supervisor, purchasing staff, materials handling staff and materials management staff. The cost of both types of indirect labor can be fully loaded with the costs of benefits and payroll taxes for financial analysis or cost accounting purposes, since these additional costs are closely associated with the indirect labor positions (Adams, 2014). Direct material cost is the cost of important materials that are used in the manufacture of a product or used in providing a service. Direct material costs are definitely identifiable to the contract. The concept of estimating direct materials costs is very straightforward. It consists of determining what is needed, how much is needed, and...
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...At the end of 1996, a study of the Consumer Price Index was done under the leadership of Michael Boskin in which they declared that the CPI has been overstated and that the index should have been at a rate of 1.8% as opposed to the reported amount of 2.9%. His report also included that the CPI had been overstated similarly of the past twenty years. The finding in his report shows that the government was doing a good job at controlling inflation and that productivity was higher than previously reported. Since our government uses index to adjust stats such as GDP per capita, a reduction in CPI shows our economic performance as improved. We cannot afford to take his report into consideration as there are many flaws and deceptions in his findings. The CPI is made up of many details below are a few key points that will help that will help to reveal the flaws and deceptions regarding Boskin’s determination. Wrong Market Basket The BLS conducts a survey every ten years on consumer behavior in order to set up a weighted “market basket of goods and services” that is supposed to represent outlays of the average citizen and is adjusted for any changes they find in lifestyle. These adjustments only consider two lifestyles the CPI-W which represents living conditions for lower middle class and poor urban household getting their income from wages and salaries as clerical non-executive workers, and the CPI-U which represents non-wealthy urban consumers inclusive of wage earners, salaried...
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...can be increased by either cutting costs or adding value and increasing the price of a product or service. The profit margin means the amount by which revenue from sales exceeds cost in a business. The profit margin of an organization can be increased b either cutting cost or adding value and increasing the price of a product or service as if the price does cheaper the more customers who will be able to afford the product equalling more units sold and more profit will be earned from the extra units sold. Secondly if the organization decides to make the product more expensive, then the people who are looking to buy the product will have to pay extra earning the organization more than what they would have had from the original price. Finally if the organization add value to their product it will make it unique from the market meaning the can add extra price to the product because others doesn't exist like this. This will also get the customers to be interested in the product because of it is unique so they will be willing to pay the extra cost towards it. However the profit margin of an organisation cannot be increased by cutting cost, adding value and increasing the products price because the current customers may not be able to pay from the extra cash, making less people to buy it costing the organization to lose money. Secondly adding value means that the organization will have to pay extra to make the product from the original product price. So if enough people don’t buy the...
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...In 2005 the price of crude oil averaged $50.23 per barrel. In comparison, the average price for crude oil in 2004 was $36.98 per barrel. Fast-forward to the present, and the price of crude oil averages $77 per barrel. Additionally, taxes account for approximately 19 percent of the cost of a gallon of gasoline. In my state of Washington, each gallon of gas is taxed at 54.4 cents 1 and the average cost for a gallon of gas is $2.93 2 Even when crude oil prices are stable, gasoline prices normally fluctuate due to factors such as seasonality and local retail station competition. Additionally, gasoline prices can change rapidly due to crude oil supply disruptions stemming from world events, or domestic problems such as refinery or pipeline outages. Seasonality in the demand for gasoline - When crude oil prices are stable, retail gasoline prices tend to gradually rise before and during the summer, when people drive more, and fall in the winter. Good weather and vacations cause U.S. summer gasoline demand to average about 5 percent higher than during the rest of the year. If crude oil prices remain unchanged, gasoline prices would typically increase by 10-20 cents from January to the summer. Changes in the cost of crude oil - Events in crude oil markets were a major factor in an increase of gasoline prices for the past 10 years including present times 3. Crude oil prices are determined by worldwide supply and demand, with significant influence by OPEC who has tried...
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...Suppliers, Cost, Price Tag, and Assurance Price and Cost “When you stop to think about what price is, are you talking about the price tag or are you talking about the cost, the total cost” (Dr. W. Edwards Deming as cited in Encyclopedia Britannica Education Corporation, 1984). “. . . [I]t is total cost that is important not the price tag on what you buy” (Dr. W. Edwards Deming as cited in Massachusetts Institute of Technology, 1982). These words, or others along these same lines, are probably some of Dr. Deming’s mostly quoted sayings. And why not, he was right. It is still not at all that uncommon of a practice for purchasing departments to select a supplier based on price alone. That is, the supplier with the lost price gets the job. In addition, in order to insure the lowest price, is obtained the performance appraisals of purchasers are often tied to the amount money they save the company. On the surface this may seem reasonable and rational. The problem arises when the part is used and downtime, rework, and scrap results. The cost of the initial part is what Dr. Deming refers as the “price tag,” this plus the cost of using the part, rework, scrap, etc. is the “total cost.” So what you want is ‘good’ quality parts from your suppliers. All we need to do then is tell them to implement TQM and everything will fine, right? Well it would be nice if were that simple. But if you think out about it a bit, if the supplier had the desire, or the capability to implement TQM, wouldn’t...
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...I believe Walmart is a very successful company from a business standpoint. The company is the world's third largest public corporation list in 2012, the biggest private employer in the world with over two million employees, and is the largest retailer in the world. It has 8,500 stores in 15 countries and is the largest and most profitable retailer in the United States. However, from a moral standpoint Walmart may not be as successful as many may think. It has violated many human rights in some of its third world countries, as depicted in the film “Wal-Mart: The High Cost of Low Price.” In the movie, they take an extremely biased stance against Walmart accusing the company of being inhumane, and not recognizing the rights of workers. It also went further and said that they attempt to cover up these actions, by teaching the workers to lie. The movie however fails to recognize that Walmart is not the only company to engage in such actions. In fact, shoe companies, such as Nike, and clothing companies, such as Hollister, are known to make their products in sweatshops. Some of the allegations brought up against Walmart proved to be true. On of their major attacks were, “The income of a Walmart associate is below the poverty level in America.” They continued by providing customer testimonies that stated that they wanted to quit but they could not afford too. Walmart should not be ridiculed for the amount of money they pay their associates. To get a job at Walmart you must be 16...
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...group K EC161/EC282: Economics coursework: Group assignment with individual component – Question A Table of Contents Introduction 4 Price Ceiling 4 Main Body 5 How It Effects Landlords 6 How It Effects Consumers 7 How It Creates A Black Market For The Good 8 Conclusion 10 References 11 Introduction Price Ceiling A price ceiling is a government imposed price control to make sure that a goods can not be sold for more than a certain price, they cap the price at a certain point rather than letting be sold at the equilibrium. When a price ceiling is set there is more demand in the market than the product being supplied. The government has created excess demand by driving down the price of the product. Taylor (2006) claims that in order for a price ceiling to work it must be set below the equilibrium price of a market. If this does not happen then the ceiling would not have an effect on the price of a good because it would still continue to operate at the current price. As shown on the graph above when the price ceiling is put into place the price shifts from P* to P1 this then lowers the quantity available to the public at the new price from Q* to Q1. However there is now demand for this product of Q2 this shows that there is excess demand of Q1 to Q2. This means that there is inefficiency within the market where the price ceiling is placed, as there is more demand than supply. Figure 1 Adapted by Toby Redman. Taken from Riley (2012b) Figure 1 Adapted by...
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...annual cost to himself of owning the ride-on lawn mower (this is called the user-cost or user-cost of capital). He has the following information: Initial purchase price of lawn mower = $5,000 Nominal interest rate = 6% per annum (Patrick has to borrow the $5,000) Physical rate of depreciation on a lawn mower = 10% per annum Expected sale price of lawn mower at end-of-year = $4,800 (i) Calculate in $s the cost to Patrick of owning the lawn mower for a year. (Hint: You will get a slightly different answer depending on how you treat depreciation. Either way is acceptable) One issue with this question is how to interpret the expected sale price at the end of the year. (I will make sure to be clearer in the future). One way is to assume that it is the market price of the depreciated lawn mower at the end of the year. In this case $4,800 will reflect two things: - The effect of physical depreciation and - Any change in the market price of new lawn mowers (a pure capital gain or loss) Under this assumption User-cost = initial purchase price + interest cost on borrowing – expected sale price User-cost ($) = 5000 + 0.06(5000) – 4800 User-cost ($) = $500 An alternative approach (and the one we will use) is to measure physical depreciation and the capital gain (loss) separately. In this case we have: User cost = initial purchase price + interest cost on borrowing – [(depreciated lawn mower)×end of year price of new lawn mower)] User-cost ($) = 5000 + 0.06(5000) – (1-0.10)(4800) User-cost ($)...
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...January 1 is $260,000 (at cost). During the year, $500,000 of merchandise (at cost) is purchased. The ending inventory is $275,000 (at cost). Operating costs are $90,000. a. Calculate the cost of goods sold b. Calculate the net profit Question # 2: A retailer has a beginning monthly inventory valued at $60,000 at retail and $35,000 at cost. Net purchases during the month are $140,000 at retail and $70,000 at cost. Transportation charges are $7,000. Sales are $150,000. Markdowns and discounts equal $20,000. A physical inventory at the end of the month shows merchandise valued at $10,000 (at retail) on hand. Compute the following: a. Total merchandise available for sale – at cost and at retail b. Cost complement c. Ending retail book value of inventory d. Stock shortages e. Adjusted ending retail book value f. Gross profit ---------------------------------------------------------------------------------------------------- Chapters 17 Question # 3: A car dealer purchased multiple –disc CD players for $1175 each and desires a 40% markup (at retail). What retail price should be charged? MAR 4231 = Financial Formulas Note: When calculating the financials, please round to four decimal places. For example: 1.7658643983 = 1.7659 (four decimal places) 0.4322222222 = 0.4322 (four decimal places) Asset turnover = Net sales Total assets Cost complement = is the relationship of cost to retail value of merchandise available for sale Total cost valuation Total retail...
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...• Question 2 2 out of 2 points Cost-plus pricing is effectively opposite of a prudent pricing strategy because _____. Answer Selected Answer: it leads to overpricing in weak markets and underpricing in strong markets Correct Answer: it leads to overpricing in weak markets and underpricing in strong markets • Question 3 2 out of 2 points Proactive, value-based, and profit-driven principles are typically embodied by _____. Answer Selected Answer: successful pricing strategies Correct Answer: successful pricing strategies • Question 4 2 out of 2 points A problem with customer-driven pricing is _____. Answer Selected Answer: pricing is based on willingness-to-pay and the ignorance of the value of the product Correct Answer: pricing is based on willingness-to-pay and the ignorance of the value of the product • Question 5 2 out of 2 points A company that is willing to be a smaller company in order to be profitable is employing the _____ principle of strategic pricing. Answer Selected Answer: profit-driven Correct Answer: profit-driven • Question 6 0 out of 2 points Strategic pricing is proactive in _____. Answer Selected Answer: anticipating what a customer will pay for a product before calculating cost to produce the product Correct Answer: acknowledgment that pricing affects volume and that volume affects cost • Question 7 0 out of 2 points ...
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...to take into consideration the thoughts of the sales department, lead by Jairo Cadena. Atlantic’s biggest competitor is Ontario Computer, Inc, which is a cost cutter in the industry, and Atlantic Computer needs to bear in mind the customers and products that Ontario is after as well. Problem Identification Jowers was faced with a challenge of recommending a right price for the new bundle that Atlantic was planning to launch. According to the Tronn performance test results, he knew that one Tronn server equipped with the PESA tool was equivalent to four Zink (competitor’s basic server). This, among other things, made Jowers’ decision extremely difficult. Jowers had four options in front of him. 1. Continue the company tradition of charging for the server and provide the PESA tool for free 2. Charge a price equivalent to four Zink servers 3. Charge a marked-up price based on development cost of PESA tool 4. Charge a price based on value-in-pricing Situation Analysis Continuing with the company’s tradition would mean that the price of the bundle would not include the R&D costs of developing the PESA tool. Charging the price equivalent of four Zink servers would make it very expensive and unattractive to potential buyers. Charging a marked-up price or value-in-pricing would make most sense, but what would the price be? SWOT Analyses...
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...can be noted that the answer of local retailers illustrates that there is some price-taking ability exists, but will not be able to follow the price maker due to the low prices that Coles and Woolworths sets for their products. They cannot be price makers due to the inability to be able to earn enough profit as a result of the costly payments made to suppliers due to the lack of influence over their suppliers. They buy smaller quantities of their products and thereby pay a higher price per unit and cannot earn from economies of scale due to their small size. This forces...
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...organization. The remaining 3p’s are the variable cost for the organization. It costs to produce and design a product , it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organization. Pricing should take into account the following factors: 1. Fixed and variable costs. 2. Competition 3. Consumers To price this product we are going to use the cost based pricing method. The procedure of this method is that the product cost should be calculated first. To calculate the product cost we need to include the cost of operating the business, which includes raw materials, advertising, wages, rents, and other indirect cost incurred on the product. Once the product cost is calculated, then add the profit level to the product cost to get the selling price. We are using the market penetration pricing strategy to achieve high volumes of sales and deep market penetration of our new product. Calculation of selling price of our product Direct material cost Rs: 10.00 Direct labor cost Rs : 08.00 Variable production overhead Rs: 15.00 Fixed production overheads Rs : 10.00 Total cost Rs: 43.00 Mark-up percentage Rs: 25% Selling price Rs:53...
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...pressure is intensified because, for the most part, managers believe that they don’t have control over price: It is dictated by the market. Moreover, pricing is often seen as a difficult area in which to set objectives and measure results. Ask managers to define the objective for the company’s manufacturing function, and they will cite a concrete goal, such as output and cost. Ask for a measure of productivity, and they will refer to cycle times. But pricing is difficult to pin down. High unit sales and increased market share sound promising but they may in fact mean that a price is too low. And forgone profits do not appear on anyone’s scorecard. Indeed, judging pricing quality from outcomes reported on financial statements is perilous business. Yet getting closer to the “right” price can have a tremendous impact. Even slight improvements can yield significant results. For example, for a company with 8%profit margins, a 1% improvement in price realization—assuming a steady unit sales volume—would boost the company’s margin dollars by 12.5%.1 For that reason, even one step toward better pricing can be worth a lot. To improve a company’s pricing capability, managers should begin by focusing on the process, not on the outcome. The first question to ask is not, What should the price be? but rather, Have we addressed all the considerations that will determine the correct price? Pricing is not simply a matter of getting one key thing right. Proper pricing comes from carefully and...
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