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Tài liệu tiếng Anh thương mại quản lý Chapter 14 Price and cost analysis
Chapter 14 Price and Cost Analysis 14-1 Key Concepts • General Economic Considerations » Conditions Of Competition » Variable-Margin Pricing » Product Differentiation » Six Categories Of Cost » Regulation by Competition 14-2 Key Concepts • Price Analysis » Competitive Price Proposals » Regulated, Catalog, and Market Prices » Internet/e-Procurement » Historical Prices » Independent Cost Estimates 14-3 Key Concepts • Cost Analysis » Cost Analysis Defined » Capabilities of Management » Efficiency of Labor » Amount and Quality of Subcontracting » Plant Capacity • Sources of Cost Data » Potential Suppliers » Supply Partners » Cost Models 14-4 Key Concepts • Direct Costs » Direct Labor » Direct Materials • Tooling Costs • Learning Curves » Cumulative Curve and the Unit Curve » Target Cost Estimation 14-5 Key Concepts • Indirect Costs » Engineering Overhead » Materials Overhead » Manufacturing Overhead » General And Administrative » Selling » Recovering Indirect Costs • Activity-Based Costing • Target Costing • Profit 14-6 Introduction • Obtaining materials at the right price can be a firm’s success or failure • Price or acquisition cost, is largest component of total cost. • Right price, a fair and reasonable price to both the buyer and the seller • no magic formula for calculating • The right price is not equal for all suppliers 14-7 General Economic Considerations • Conditions Of Competition • Variable-Margin Pricing • Product Differentiation • Six Categories Of Cost • Regulation by Competition 14-8 Conditions of Competition • Three fundamental types of competition exist: » Pure Competition – Supply and demand determines prices » Imperfect Competition – Monopolistic Competition – Oligopoly » Monopoly – One seller controls entire supply 14-9 Conditions of Competition Pure Competition (price taker) Monopoly (price maker) Area of Imperfect Competition Monopolistic Competition Oligopoly 14-10 [...]... of prices • This method is not used if other methods are available • The price developed through an independent cost estimate should be “fair and reasonable” 14- 22 Cost Analysis • Should be employed when: » Price analysis is impractical » Or price analysis does not allow a buyer to reach the conclusion that a price is fair and reasonable • Cost analysis is generally most useful when purchasing nonstandard... nonstandard items and services 14- 23 Cost Analysis Defined • Cost analysis is a review and an evaluation of actual or anticipated costs » It involves the application of experience, knowledge, and judgment to data in an attempt to project reasonable estimated contract costs • The purpose is to arrive at a price that is fair and reasonable to both the buying and selling firms 14- 24 Elements Affecting Cost • Capabilities... a Cost Breakdown Figure 14- 2 14- 28 Direct Costs • Direct costs are normally the major portion of product or service costs • They are usually easily traceable • They generally serve as the basis for allocation of supplier overhead costs • A tiny reduction here is worth more to the buying firm than a major reduction in the percentage of profit 14- 29 Direct Costs and Prices Table 14- 3 14- 30 Direct Costs... unfair advan-tage over its competitors • The lowest evaluated price is reasonable 14- 18 Regulated, Catalog, and Market Prices • Catalog Price » Price included in a catalog or list » Must be dated » Readily available for customer inspection • Market Price » Price equals interaction of many buyers and sellers » Supply and demand establish prices 14- 19 Internet / e-Procurement • Advanced communications using... Maintenance, Utilities and Postage • Total Production Costs » Sum of variable, fixed and semi variable costs • Direct Costs • Indirect Costs (Overhead) 14- 13 Cost, Volume, Profit Relationships Figure 14- 1 14- 14 Regulation by Competition • The factors stemming from competition determine the exact price each firm will quote • That is, when faced with the realities of competition, the price any specific firm... of labor • Amount and quality of subcontracting • Plant capacity and the continuity of output 14- 25 How Production Volume Affects Fixed Costs, Variable Costs and Profit Table 14- 1 14- 26 Sources of Cost Data 1 Potential suppliers as a precondition of submitting proposals and bids 2 Suppliers with whom the firm has developed preferred or strategic supplier relationships 3 Cost models 14- 27 Example of... decline in business » Unless such additional business would affect the pricing of current or future orders 14- 16 Price Analysis • Competitive price proposals • Regulated, catalog, or market prices • Internet / e-procurement • Comparison with historical prices • Independent cost estimates 14- 17 Competitive Price Proposals • At least two qualified sources have responded • The proposals are responsive to the... business and by what it thinks its competitors will quote, not by costs or profits • A firm tends to seek the highest price that is compatible with its long-range goals 14- 15 Long versus Short Run Considerations • In the long run, a firm must recover all costs or go out of business » Plant and machinery must be maintained, modernized, and replaced • In the short run, a firm should recover variable costs and. .. relationship between the number of units produced and the number of labor hours required to produce them 14- 33 Uses of Learning Curves • Estimation of Target Costs • Improving Make-or-buy Analyses • Estimating Delivery Times • Developing Supplier Progress Payment Schedules 14- 34 Two Types of Learning Curves • Cumulative Average Cost Curve » Commonly used in price and cost analysis » Plots cumulative units produced... • Results in prices on some products that are too high • Some prices are also artificially low 14- 11 Product Differentiation • Undifferentiated: not distinguished by specific differences • Differentiated: products appear different from those of their competitors 14- 12 Six Categories of Cost • Variable Manufacturing Costs • Fixed Manufacturing Costs • Semi Variable or Mixed Manufacturing Costs » Examples: . Postage • Total Production Costs » Sum of variable, fixed and semi variable costs • Direct Costs • Indirect Costs (Overhead) 14- 13 Cost, Volume, Profit Relationships Figure 14- 1 14- 14 Regulation by Competition • The. Competition 14- 2 Key Concepts • Price Analysis » Competitive Price Proposals » Regulated, Catalog, and Market Prices » Internet/e-Procurement » Historical Prices » Independent Cost Estimates 14- 3 Key. Chapter 14 Price and Cost Analysis 14- 1 Key Concepts • General Economic Considerations » Conditions Of Competition » Variable-Margin Pricing » Product Differentiation » Six Categories Of Cost » Regulation