Chapter 11 vocabs

Chapter 11 vocabs - Outsourcing Contracting with an...

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David Trinh 14:56:25 Accounting-301 Monday 9-1pm Chapter 11 vocabs Absorption cost pricing – An approach to pricing that defines that cost base as the manufacturing cost; it excludes both variable and fixed selling and administrative costs Cost-based transfer price – A transfer price that uses as its foundation the costs incurred by the division producing the goods Cost-plus pricing – A process whereby a product’s selling price is determined by adding a markup to a cost bases. Full cost pricing – An approach to pricing that defines the cost base as all cost incurred Market-based transfer price – A transfer price that is based on existing market prices of competing products Markup – The percentage applied to a product’s cost to determine the product’s selling price Material loading charge – A charge added to cover the cost of purchasing, receiving, handling, and storing materials, plus any desired profit margin on the materials themselves Negotiated transfer price – A transfer price that is determined be the agreement of the division managers
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Unformatted text preview: Outsourcing Contracting with an external party to provide a good or service, rather than performing the work internally Target cost The cost that will provide the desire profit on a product when the seller does not have control over the products price Target selling price The selling price that will provide the desired profit on a product when the seller has the ability to determine the products price Time and material pricing An approach to cost-plus pricing in which the company uses two pricing two pricing rates, one for the labor used on a job and another for the material Transfer price The price used to record the transfer of goods between two divisions of a company Variable cost pricing An approach to pricing that defines the cost base as all variable costs; it excludes both fixed manufacturing and fixed selling and administrative costs...
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