Running head: COSTING AND PRICING DECISIONS Costing and Pricing Decisions Cost Allocations Cost allocation is the process of assigning the indirect costs of producing a product. These indirect costs may be shared by multiple products. This is where cost allocation comes into play. Indirect costs can be allocated to products, services and departments. Cost allocation allows a company to calculate fully cost of their products. This provides them the ability to price products accurately.
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Activity-Based Costing and Predatory Pricing: The Case of the Petroleum Retail Industry DISCUSSION QUESTIONS: 1. What are product-cost subsidizations? When excessive costs are charged to high-volume products while insufficient costs are charged to low-volume products. One example of how this occurs is when product-costing is based on labor-hours. Products that are produced infrequently will typically require less annual man-hours when compared to major products. Calculating the costs
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COSTING AND PRICING The key principle of costing is to calculate the true cost of a product or service while pricing is determined by demand, market conditions and factors which influence pricing such as advertising, promotional activity and the ability to differentiate from competitive or alternative products and services. Costing is based on the simple principle of recovering cost. Cost are classified as Variable or Fixed. Variable costs are those costs which vary in direct proportion
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the business entity will limit her capability in producing the good result as desired. Thus, she has to consider and being advised to apply a simple accounting technique in determining the costing and pricing mechanism of her new acquired company. As a newcomer, it is important to know how to set a costing structure to make sure that the business will produce a good return to her. We would
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UNIT 13: MANAGING FINANCIAL PRINCIPLES AND TECHNIQUES Table of Contents Task 1: Applying costs concepts to decision making process 2 1.1Explaining the importance of costs in pricing strategy 2 1.2 Designing costing and pricing system 2 1.3 Recommending proposal 4 Task 2 Application of forecasting techniques 5 2.1 Forecasting Techniques 5 2.2 Sources of Funds for the Expansion of ABZ Ltd 6 Task 3 Participating in the Budgeting Process 10 3.1 Selecting appropriate budgetary targets
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organization. Pricing is more than a number on a tag and has many components. Pricing decisions, strategies are complex and involve the decision makers to consider many elements such as the company’s positioning, the company’s brand, the customers, the competition and the marketing environment (Kotler & Keller, 2012). Companies use many methods to determine the prices for products that will generate better revenue. The owner or boss of a small business will often be the ones that determine the pricing strategy
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Strategic Transfer Pricing Author(s): Michael Alles and Srikant Datar Source: Management Science, Vol. 44, No. 4 (Apr., 1998), pp. 451-461 Published by: INFORMS Stable URL: http://www.jstor.org/stable/2634608 . Accessed: 15/08/2011 07:30 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build
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How to Set Price The global manager must develop systems and policies that address Pricing Decisions Price floor: minimum price Price ceiling: maximum price Optimum prices: function of demand Global Marketing Chapter 11 Must be consistent with global opportunities and constraints Global Marketing - Schrage Basic Pricing Concepts Market Price Strategy Law of One Price would prevail in a truly global market International trade helps keep prices low and low prices keep
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to Contemporary Managerial Accounting Concepts 1. 2. Value Chain a. Just in Time (JIT) b. Total Quality Management (TQM) c. Theory of Constraints 3. 4. 5. 6. 7. 8. 9. Target Costing Kaizen Costing Life Cycle Costing (LCC) Pricing Methods Uses and Limitations of Cost-Based and Market-Based Pricing Factors Affecting Prices Pricing Models for Not-for-Profit Organizations 3 4 5 5 6 7 8 9 10 11 11 Page Chapter Two: Total Quality Management (TQM) – an Introduction and Its Applications Chapter Three: Conclusion
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IKEA assignment. 1. Value-based pricing is inherent to IKEA's approach because the company's goal is to give a high quality furniture at lower prices. They build the brand accordingly, knowing the customer needs for design, aesthetics and function very well. IKEA targets students, young families, single people with lower to medium income. The company knows that its target market can't afford to spend too much on the furniture yet wants it to be modern. Thus, the company avoids the added cost
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