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Cost-Plus Pricing and Target Pricing Homework Help

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A universal method of pricing which is used widely by most organizations those are engaged in the world of business is called target costing. This tool is used by cost management because this leads to a reduction in the total cost of a product during its cycle of life. This starts from research plans to production which also includes designing and engineering. As this is an important topic, you should avail cost-plus pricing and target pricing homework help from myhomeworkhelp.com.

After completion, the final amount of a particular product, it is known as target costing.

Principles:

The original principles, what you learn from cost-plus pricing and target pricing assignment help are:

  1. Costing due to price-led
  2. Cost throughout its lifecycle
  3. Process designing
  4. Focus on the consumers
  5. Product designs
  6. Orientation of value chain

Cost-Plus Pricing:

It is a most simple and an intuitive method when it comes to setting prices. The process is adding up, of the overall cost required for the production of a product, the markup of the profits gained, and the price of selling.

For instance, consider a business which makes bags. Each item needs 10 dollars worth raw materials, three hours of work at 12 dollars per hour, and 5 dollars for the costs of fixed assets like rent, utilities, etc. Thus production cost for each bag is 51 dollars. But, according to the policy of business, the prices will be set at 60 dollars.

Pros and Cons of the methods of pricing:

The significant advantages of cost plus methods are:

  • simplicity
  • predictability

The con is, by this method, the price is set without considering the effects of demands. Either the price will be low or high. This may also affect efficiency. Employ cost-plus pricing and target pricing homework help for more details.

Target Costing- its advantages and the disadvantages:

This method is opposite of the former, so the price helps in determining the cost. Thus this method cannot control over price. Hence, there is a boundary for the price which the market has to pay.

Steps for target pricing methods are:

  1. Maintaining the Competitive Cost
  2. Defining Product
  • Achieving target
  1. Setting of price and cost

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