ACCT 2101 Chapter : ACCT 2101 Chap 8
Document Summary
The price that a company charges for its product or service is affected by many factors. In the long run, a company must price its product to cover its costs and earn a reasonable profit: external sales . Target costing consumer is setting the price. Cost plus pricing- manufacturer set the price. Inside outside also called target selling price. + desired roi (profit) (markup $ or %) = desired roi / total cost per unit. Consideration must be given to the impact of fixed costs on (%) if volume changes drastically. Companies set two pricing rates labor and materials. The labor includes direct labor time and other labor costs. The materials include the cost of parts and materials used plus a material loading charge for the related overhead costs: calculate the labor charge. An allowance for a roi per hour: calculate the materials and the materials loading charge (usually a %) Estimate total annual material purchasing and handling costs.
