ch06s - Cost Information for Pricing and Product Planning...

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Cost Information for Pricing and Product Planning Chapter 6
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Role Of Product Costs In Pricing And Product Mix Decisions Understanding how to analyze product costs is important for making pricing decisions: Managers make decisions about establishing or accepting a price for their products Even when prices are set by the market and the firm has little or no influence on product prices, management still has to decide the best mix of products to manufacture and sell
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Role of Product Costs Product cost analysis is also significant when a firm is deciding how best to deploy marketing and promotion resources How much commission (or how many other incentives) to provide the sales force for different products How large a discount to offer off list prices
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Short-term and Long-term Pricing Considerations The costs of many resources are likely to be committed costs in the short-term because firms cannot easily alter the capacities made available for many production and support activities For short-term decisions, it is important to note whether surplus capacity is available for additional production, or whether shortages of available capacity limit additional production alternatives
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ch06s - Cost Information for Pricing and Product Planning...

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