Chap010 - Chapter 10 Price CHAPTER 10 Price Topics Covered...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 10 - Price C HAPTER 10 Price Topics Covered Relation of Cost to Price Meaning of Cost How Suppliers Establish Price The Cost Approach The Market Approach Government Influence on Pricing Legislation Affecting Price Determination Types of Purchases Raw Materials/Sensitive Commodities Special Items Standard Production Items Small Value Items Capital Goods Services Resale Items The Use of Quotations and Competitive Bidding Firm Bidding Determination of Most Advantageous Bid Collusive Bidding The Problem of Identical Prices Discounts Cash Discounts Trade Discounts Multiple Discounts Quantity Discounts The Price-Discount Problem Quantity Discounts and Source Selection Cumulative or Volume Discounts Contract Options for Pricing Firm-Fixed-Fee Contract Cost-Plus-Fixed-Fee Contract Cost-No-Fee Contract Cost-Plus-Inventive-Fee Contract Contract Issues Provision for Price Changes Contract Cancellation Forward Buying and Commodities Forward Buying versus Speculation Organizing for Forward Buying Control of Forward Buying The Commodity Exchanges Limitations of the Exchanges Hedging Sources of Information Regarding Price Trends Conclusion Questions for Review and Discussion References Cases 10–1 Cottrill Inc. 10–2 Coral Drugs 10–3 Price Forecasting Exercise 10-1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
QUIZ RESPONSES D 1. Identical prices received from various sources should: 1. be expected when the specification is highly customized. 2. always make the buyer suspicious of collusion. 3. only draw attention if the buyer is dissatisfied with the price quoted. 4. draw attention if the specification is complex or detailed. 5. result in the buyer taking legal action against all bidders. A 2. Most direct costs are: 1. variable costs. 2. overhead costs. 3. general and administrative costs. 4. semivariable costs. 5. fixed costs. B 3. If the buyer wants to motivate the seller to manage total costs, the best type of contract is: a. firm-fixed-price (FFP). b. cost-plus-incentive-fee (CPIF) c. firm-fixed-price plus incentive fee (FFPIF). d. cost-plus-fixed-fee (CPFF). e. cost-no-fee (CNF).
Background image of page 2
C 4. The market approach to pricing: 1. means prices are set to cover direct costs, contribute to indirect, and attain a profit. 2. is the only defensible pricing mechanism for ethical companies to use. 3. implies that prices are set based on what the market will bear. 4. means that prices are adjusted regularly to ensure that the selling organization recoups all its market costs. 5. implies that market analysis is the only technique that should be employed to negotiate prices. A 5. The prime function of an organized commodity exchange is to furnish an established marketplace where: a. the forces of supply and demand operate freely. b.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 20

Chap010 - Chapter 10 Price CHAPTER 10 Price Topics Covered...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online