Page 262 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 13: Pricing Decisions

2. Before a decision on the pricing is made, certain factors need to be considered. What are Notes
those factors?

3. The aim of the fixer of prices is to sell the present and future capacity for the greatest
obtainable contribution. Discuss.
4. Illustrate full cost pricing with a suitable example.
5. If Fixed Cost $25,000, Variable cost $2.00 per unit, Number of Units produced 4,000 and
Mark-up is 15% on the break-even price, what will be selling price to the customers?
6. Critically evaluate the key methods of pricing.
7. Discuss the concept of Goal congruence.
8. From the details given below calculate minimum price of product X:
Material $3.50
Labor (2 hrs. @ $3.00) $5.00
Variable production overhead $2.50
Fixed production overhead $1.20

Total $9.70

9. What is the significance of using odd pricing strategies? Give some suitable examples.
10. Why companies go for discriminatory pricing strategy?

Answers: Self Assessment

1. Product Life Cycle 2. obtainable contribution
3. volume 4. prices
5. value pricing 6. odd pricing
7. alternatives 8. average price
9. Full 10. lowest
11. Minimum pricing 12. market norm
13. Marginal cost pricing 14. transfer pricing
15. traditional method

13.7 Further Readings

Books B.M. Lall Nigam and I.C. Jain, Cost Accounting, Prentice-Hall of India (P) Ltd.
Hilton, Maher and Selto, Cost Management, 2nd Edition, Tata McGraw-Hill
Publishing Company Ltd.
M.N. Arora, Cost and Management Accounting, 8th Edition, Vikas Publishing House
(P) Ltd.
M.P. Pandikumar, Management Accounting, Excel Books.

Online links www.allbusiness.com
www.internalaccounting.com

LOVELY PROFESSIONAL UNIVERSITY 257