2 Important factors Three important factors that influence the pricing of a product or service are:
§ costs来自www.Examw.com
§ customers
§ competition.
2.1 Cost-based pricing: the accountant’s approach
‘Cost plus’ pricing is a much favoured traditional, approach to establishing the selling price by:
§ Calculating the unit cost
§ Adding a mark-up or margin to provide profit.
The unit cost may reflect:
§ full cost
§ manufacturing cost
§ variable cost
The mark-up is equally subjective and often reflects:
§ the risk involved in the product
§ competitors’ mark-ups
§ desired profit and/or ROCE (return on capital employed)
§ type of cost used
§ type of product, etcwｗw.ExamＷ.CoM
It is important to understand the difference between:
§ Profit mark-up: the profit is quoted as a percentage of the cost.
§ Profit margin: the profit is quoted as a percentage of the selling price.
Illustration 1 – Important factors
If the full cost of an item is $540, calculate the selling price using a 25% mark up and a 25% profit margin:
Solution
§ A 25% mark-up would produce a selling price of $675 ($540 × 1.25)
§ A 25% profit margin would produce a selling price of $720 ($540/75 × 100).
发表于 2012-2-23 17:09:42
