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Pricing Decisions and Cost Management
Pricing Decisions and Cost Management
Cost Management
Chapter
12
Relevant Costs
Variable manufacturing $38.00
Fixed manufacturing 1.10
Total $39.10
$165,000 ÷ 150,000 = $1.10
Any bid above $39.10 will improve
Lomas’s profitability in the short run.
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 12 - 10
Costing and Pricing
for the Short Run – Example
Market-based
Cost-based
(also called cost-plus)
o st Curve
ed-in C
Cumulative Costs per Unit
Lo ck
v e
C ur
nce
re
ur
- Inc
C o st
Value-Chain
Functions
Price stability
Simplicity
Nonproduction costs
Price discrimination
Peak-load pricing