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The following are some other cost techniques which are useful to management’s decision making: Opportunity Cost Represents the opportunities which have been forgone by following one course of action rather than an alternative course. The opportunity cost in this case is the profit foregone by utilizing scarce resources for one [...] It is important that Management needs to have sufficient and relevant information to make the correct decisions. Hence,the need to understand relevant costs. What really is Relevant cost? A relevant cost relates to future expected costs that will differ with each alternative used. Because of the [...] In this Part 5,we look at two other pricing methodologies which are as follows: Break-Even Pricing: For this type of pricing,the price at which the products will break-even is used. This break-even price will then be added a profit mark up. In earlier Part 2&Part 3 we have covered cost plus pricing &Variable/Marginal Cost Plus Pricing respectively,in this article we look at the Rate Of Return Pricing Metholodgy: Rate Of Return Pricing: For this type of pricing,the company needs to specify the rate of return on its [...] In earlier Part 2,we discussed the Cost Plus Pricing Methodology,here in this article,we look at the variable or marginal cost plus pricing. Using the variable or marginal cost plus pricing methodology:- The selling price is determined by adding a mark up or margin on [...] |  FCCA,CA(MIA)with more than 26 years of post-qualifying working experiences. Previous working stints with one of the big accounting four,Regional GFC & Group Treasurer in a group of Malaysian and Group CFO in Singapore public listed concern.Also author to another very popular free educational accounting cum finance blog:http://basiccollegeaccounting.com under the branding of College Accounting Coach. | |||||
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