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Pricing is based on direct labor and overhead. Materials does not affect pricing. Example: Your customer provides materials used in production.

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16y ago

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Disadvantages of Cost-Based pricing?

The cost based pricing may overlook costs that are not monetary. Cost based pricing may overlook inefficiency Cost based pricing may not take advantage of consumer surplus.


Is the cost of direct materials classified as a conversion cost?

No, Conversion cost is the sum of direct labor cost and manufacturing overhead cost.


The advantages and disadvantages of full cost plus pricing?

The advantage of full cost plus pricing is the higher return on investment. The disadvantage of full cost-plus pricing is lower demand for the products.


What are some examples of pricing strategies used by businesses to determine the cost of their products or services?

Some examples of pricing strategies used by businesses include cost-plus pricing, value-based pricing, competitive pricing, and dynamic pricing. Cost-plus pricing involves adding a markup to the cost of production. Value-based pricing considers the perceived value of the product or service to customers. Competitive pricing involves setting prices based on what competitors are charging. Dynamic pricing adjusts prices based on factors like demand and market conditions.


What has the author Spencer A Tucker written?

Spencer A. Tucker has written: 'Pricing for higher profit' -- subject(s): Pricing 'The complete machine-hour rate system for cost-estimating and pricing' -- subject(s): Cost accounting, Pricing 'Cost-estimating and pricing with machine-hour rates' -- subject(s): Cost accounting, Industrial Costs, Prices


What is the difference between cost plus pricing and marginal pricing?

Cost plus pricing is based on full product cost plus desired profit margin to arrive at the product price, while marginal cost plus pricing makes use of the product's total variable cost plus desired profit margin to arrive at the product's price. Marginal cost plus pricing (or "mark-up pricing) is based on demand, and completely ignores fixed costs in arriving at the product's price.


What is the differences between cost-based pricing or market-based pricing?

Cost based pricing uses the costs that were invested in producing the goods. In market based pricing, supply and demand are the key factors that determine price.


What are the different pricing methods available for businesses to consider?

Businesses can consider various pricing methods, such as cost-plus pricing, value-based pricing, competitive pricing, and dynamic pricing. Cost-plus pricing involves adding a markup to the cost of production. Value-based pricing focuses on the perceived value of the product or service to customers. Competitive pricing involves setting prices based on what competitors are charging. Dynamic pricing adjusts prices based on factors like demand and market conditions.


Is Direct material cost combined with manufacturing overhead cost is known as conversion cost?

false, direct labor and manufacturing overhead = conversion cost


What is conversion cost in cost sheet?

conversion cost = direct wages + factory overheads (indirect material + indirect wages)


What approach to pricing Cost based pricing Competition Based Pricing Demand based pricing?

I'm doing a school assignment so I have no clue! :)


What is the one cost that would be classified as part of both prime cost and conversion cost?

The one cost that would be classified as part of both prime cost and conversion cost would be: