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Unformatted text preview: is not valid for all forms of market organization. 3. Cost-accounting systems are not designed to measure the marginal changes in cost incurred as production and sales increase unit by unit. To measure marginal cost would entail a very costly information system. III. Role of Accounting Product Costs in Pricing General formula Price = Cost + (markup % *cost) Depending on how cost is defined, markup % may differ. 1 A. Cost-plus pricing B. Absorption-cost pricing formulas C. Variable-cost pricing formulas D. Determining the markup IV. Strategic Pricing of New Products A. Price skimming: Initial high price B. Penetration pricing: Initial low price V. Target Costing A. Key principles B. Activity-based costing and target costing C. Value engineering VI. Other Issues A. Time and material pricing B. Competitive bidding C. Antitrust laws 2...
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