管理会计双语人教版chapter 10.pptVIP

When a company is a price-taker, it emphasizes a target-pricing approach to pricing. Target pricing starts with the market price of the product (the price customers are willing to pay) and then subtracts the company’s desired profit to determine the product’s target full cost—the full cost to develop, produce, and deliver the product or service. In this relationship, the market price is “taken.” A product’s full cost contains all elements from the value chain—both inventoriable costs and period costs. It also includes both fixed and variable costs. If the product’s current cost is higher than the target cost, the company must find ways to reduce costs or it will not meet its profit goals. Managers often use ABC costing along with value engineering to find ways to cut costs. When a company is a price-setter, it emphasizes a cost-plus approach to pricing. This pricing approach is essentially the opposite of the target-pricing approach. Cost-plus pricing starts with the company’s full cost (as a given) and adds its desired profit to determine a cost-plus price. When the product is unique, the company has more control over pricing. The company still needs to make sure that the cost-plus price is not higher than what customers are willing to pay. Our pricing decision rule is shown here. If the company is a price-taker, it should emphasize target pricing. If the company is a price-setter, it should emphasize cost-plus pricing. The third learning objective addresses making dropping a product and product-mix decisions. Managers must often decide whether to drop products, departments, or territories that are not as profitable as desired. How do managers make these decisions? Here are some of the questions managers must consider when deciding whether to drop a product line, department, or territory. Once again, we follow the two key guidelines for special business decisions: (1) focus on relevant data, and (2) use a contribution margin approach. The relevant financial da