CVP Analysis

These are the major influences on pricing decision except,

• customer's image

• customer demand

• competitors' pricing strategy

• political related issues

Examples of industries that used cost-based pricing are...

• agricultural

• aircraft

• petroleum

• home appliances

How do political consideration be relevant?

• political pressure on legislators

• to allow high reputation firm setting a high price on their new product

• avoid discriminating customers in setting prices

• collusion in price setting

Variable cost per unit will:

• Remain the same as production level change

• Increase as production decrease

• Decrease as production increase

• Decrease as production decrease

Which of the following is fixed cost?

• Commission

• Factory rent

• Labour wages

• Direct material

What is mixed cost?

• Cost that change in total when the level of production changes

• Cost that are unchanged in total as the level of production changes

• It shows gross profit after cost of goods sold

• Include both fixed and variable cost components

What are decisions that needed to be made by managers?

• how many units to be sold

• how many hours to produce the product

• how much to be produced

• how changes in cost and sales volume can affect a business' profit

Tools that managers can use is...

What are the most important factors in major influences on pricing decisions?

• costs

• competitors pricing strategy

• political, legal and image related issues

• customer demand

What method does the companies usually use to gather information?

• pricing decision

• market forces and cost

• market research and test marketing

• public image