BU247 Lecture Notes - Lecture 2: Variable Cost, Target Costing, Cost Driver
Document Summary
There are two ways to incorporate pricing decisions: Market-determined price where the organization will use the product cost information to determine the price. The organization set the product"s price through incremental increase. This approach is called the cost plus pricing: product planning: Target costing refers to an organization"s approach in order to focus on products and designing that maximize profits: budgeting: One of the key roles of costing information is how an organization forecasts it"s earnings and expenses, setting up its direction: performance evaluation: Managers compare the performance of the organization with their forecasted budget: contracting: Organizations are reimbursed for their costs in some cost-reimbursement contracts. Governments play a big part in this and implement some standards as to how these reimbursement contracts and costings will be for the organizations. Variable: this is the type of cost that increases proportionally with the changes in the activity level of a variable.
