cost accounting part 4 Flashcards
How was the traditional production environment characterized?
Traditionally, it was labor-intensive with low overheads and a relatively uncompetitive market.
How is the current production environment characterized?
The current environment is capital-intensive, machine-paced, with high overheads and a competitive international market.
What is the formula for Cost Plus Pricing?
Cost Plus Pricing = Product Cost + Markup Price
What is markup in the context of pricing?
Markup is the ratio between the cost of making a good and the selling price.
Is the price determined by Cost Plus Pricing flexible?
Yes, the price is flexible depending on customer behavior and competitor pricing.
Calculate the cost plus price if the product cost is $600 with a markup percentage of 10%.
Cost Plus Price = $600 * 1.1 = $660.
What is Market Based Pricing?
Market Based Pricing starts with a target price based on customers’ perceived value and competitors’ pricing.
What is a target cost in Market Based Pricing?
Target cost is the estimated long-run cost per unit that enables a company to achieve target income when selling at the target price.
What is the process of planning for corporate objectives?
Identify business objectives, consider options, evaluate options, make a selection, prepare long-term plans, and prepare budgets.
What is included in the budgeting process?
Develop broad assumptions about the economy, industry, and organizational strategy; prepare a sales budget, which all other budgets rely on.
