管理会计ch12.docx

1、管理会计ch12CHAPTER 12PRICING DECISIONS AND COST MANAGEMENT12-1 The three major influences on pricing decisions are1. Customers2. Competitors 3. Costs12-2 Not necessarily. For a one-time-only special order, the relevant costs are only those costs that will change as a result of accepting the order. In t

2、his case, full product costs will rarely be relevant. It is more likely that full product costs will be relevant costs for long-run pricing decisions.12-3 Two examples of pricing decisions with a short-run focus:1. Pricing for a one-time-only special order with no long-term implications.2. Adjusting

3、 product mix and volume in a competitive market.12-4 Activity-based costing helps managers in pricing decisions in two ways.1. It gives managers more accurate product-cost information for making pricing decisions.2. It helps managers to manage costs during value engineering by identifying the costim

4、pact of eliminating, reducing, or changing various activities.12-5 Two alternative starting points for long-run pricing decisions are1. Market-based pricing, an important form of which is target pricing. The market-based approach asks, “Given what our customers want and how our competitors will reac

5、t to what we do, what price should we charge?”2. Cost-based pricing which asks, “What does it cost us to make this product and, hence, what price should we charge that will recoup our costs and achieve a target return on investment?”12-6 A target cost per unit is the estimated long-run cost per unit

6、 of a product (or service) that, when sold at the target price, enables the company to achieve the targeted operating income per unit.12-7 Value engineering is a systematic evaluation of all aspects of the value-chain business functions, with the objective of reducing costs while satisfying customer

7、 needs. Value engineering via improvement in product and process designs is a principal technique that companies use to achieve target costs per unit.12-8 A value-added cost is a cost that customers perceive as adding value, or utility, to a product or service. Examples are costs of materials, direc

8、t labor, tools, and machinery. A nonvalue-added cost is a cost that customers do not perceive as adding value, or utility, to a product or service. Examples of nonvalue-added costs are costs of rework, scrap, expediting, and breakdown maintenance.12-9 Cost incurrence describes when a resource is con

9、sumed (or benefit forgone) to meet a specific objective. Locked-in costs, or designed in costs, are costs that have not yet been incurred but, based on decisions that have already been made, will be incurred in the future.12-10 Cost-plus pricing is a pricing approach in which managers add a markup t

10、o cost in order to determine price.12-11 Cost-plus pricing methods vary depending on the bases used to calculate prices. Examples are (a) variable manufacturing costs; (b) manufacturing function costs; (c) variable product costs; and (d) full product costs.12-12 Two examples where the difference in

11、the costs of two products or services is much smaller than the differences in their prices follow:1. The difference in prices charged for a telephone call, hotel room, or car rental during busy versus slack periods is often much greater than the difference in costs to provide these services. 2. The

12、difference in costs for an airplane seat sold to a passenger traveling on business or a passenger traveling for pleasure is roughly the same. However, airline companies price discriminate. They routinely charge business travelersthose who are likely to start and complete their travel during the same

13、 week excluding the weekenda much higher price than pleasure travelers who generally stay at their destinations over at least one weekend.12-13 No. Life-cycle budgeting is an estimate of the revenues and costs attributable to each product from its initial R&D to its final customer servicing and supp

14、ort.12-14 Three benefits of using a product life-cycle reporting format are:1. The full set of revenues and costs associated with each product becomes more visible.2. Differences among products in the percentage of total costs committed at early stages in the life cycle are highlighted.3. Interrelat

15、ionships among business function cost categories are highlighted.12-15 Predatory pricing occurs when a business deliberately prices below its costs in an effort to drive competitors out of the market and restrict supply, and then raises prices rather than enlarge demand. Under U.S. laws, dumping occ

16、urs when a non-U.S. company sells a product in the United States at a price below the market value in the country where it is produced, and this lower price materially injures or threatens to materially injure an industry in the United States. Collusive pricing occurs when companies in an industry c

17、onspire in their pricing and production decisions to achieve a price above the competitive price and so restrain trade.12-16 (2030 min.) Relevant-cost approach to pricing decisions, special order.1. Relevant revenues, $4.00 1,000 $4,000Relevant costs Direct materials, $1.60 1,000 $1,600 Direct manuf

18、acturing labor, $0.90 1,000 900 Variable manufacturing overhead, $0.70 1,000 700 Variable selling costs, 0.05 $4,000 200 Total relevant costs 3,400 Increase in operating income $ 600This calculation assumes that:a. The monthly fixed manufacturing overhead of $150,000 and $65,000 of monthly fixed mar

19、keting costs will be unchanged by acceptance of the 1,000 unit order.b. The price charged and the volumes sold to other customers are not affected by the special order.Chapter 12 uses the phrase “one-time-only special order” to describe this special case.2. The presidents reasoning is defective on a

20、t least two counts:a. The inclusion of irrelevant costsassuming the monthly fixed manufacturing overhead of $150,000 will be unchanged; it is irrelevant to the decision.b. The exclusion of relevant costsvariable selling costs (5% of the selling price) are excluded.3. Key issues are:a. Will the exist

21、ing customer base demand price reductions? If this 1,000-tape order is not independent of other sales, cutting the price from $5.00 to $4.00 can have a large negative effect on total revenues.b. Is the 1,000-tape order a one-time-only order, or is there the possibility of sales in subsequent months?

22、 The fact that the customer is not in Dill Companys “normal marketing channels” does not necessarily mean it is a one-time-only order. Indeed, the sale could well open a new marketing channel. Dill Company should be reluctant to consider only short-run variable costs for pricing long-run business.12

23、-17 (2030 min.) Relevant-cost approach to short-run pricing decisions.1. Analysis of special order:Sales, 2,500 units $80 $200,000Variable costs:Direct materials, 2,500 units $40 $100,000Direct manufacturing labor, 2,500 units $15 37,500Variable manufacturing overhead, 2,500 units $5 12,500Other var

24、iable costs, 2,500 units $4 10,000Sales commission 7,000Total variable costs 167,000Contribution margin $ 33,000Note that the variable costs, except for commissions, are affected by production volume, not sales dollars.If the special order is accepted, operating income would be $700,000 + $33,000 =

25、$733,000. 2. Whether Fontaines decision to quote full price is correct depends on many factors. He is incorrect if the capacity would otherwise be idle and if his objective is to increase operating income in the short run. If the offer is rejected, Regis, in effect, is willing to invest $3,000 in im

26、mediate gains forgone (an opportunity cost) to preserve the long-run selling-price structure. Fontaine is correct if he thinks future competition or future price concessions to customers will hurt Regiss operating income by more than $33,000. There is also the possibility that Adams could become a l

27、ong-term customer. In this case, is a price that covers only short-run variable costs adequate? Would Hayes be willing to accept a $7,000 sales commission (as distinguished from her regular $30,000 = 15% $200,000) for every Adams order of this size if Adams becomes a long-term customer?12-18 (1520 m

28、in.) Short-run pricing, capacity constraints.1. Per kilogram of hard cheese:Milk (10 liters $1.50 per liter)$15 Direct manufacturing labor 5 Variable manufacturing overhead 3 Fixed manufacturing cost allocated 6 Total manufacturing cost$29 If Vermont Hills can get all the Holstein milk it needs, and

29、 has sufficient production capacity, then, the minimum price per kilo it should charge for the hard cheese is the variable cost per kilo = $15+5+3 = $23 per kilo.2. If milk is in short supply, then each kilo of hard cheese displaces 2.5 kilos of soft cheese (10 liters of milk per kilo of hard cheese

30、 versus 4 liters of milk per kilo of soft cheese). Then, for the hard cheese, the minimum price Vermont should charge is the variable cost per kilo of hard cheese plus the contribution margin from 2.5 kilos of soft cheese, or, $23 + (2.5 $8 per kilo) = $43 per kiloThat is, if milk is in short supply

31、, Vermont should not agree to produce any hard cheese unless the buyer is willing to pay at least $43 per kilo.12-19 (2530 min.) Value-added, nonvalue-added costs.1.CategoryExamplesValue-added costsa. Materials and labor for regular repairs$2,500,000Nonvalue-added costsb. Rework costsc. Expediting c

32、osts caused by work delaysg. Breakdown maintenance of equipmentTotal$ 170,000 165,000 160,000$ 495,000Gray aread. Materials handling costse. Materials procurement and inspection costsf. Preventive maintenance of equipmentTotal$ 150,000 130,000 110,000$ 390,000Classifications of value-added, nonvalue-added, and gray area costs are often not clear-cut. Other classifications of some of the cost categories are a