Managerial Accounting

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Managerial Accounting Ninth Edition

Weygandt Kimmel Mitchell

Chapter 8

Pricing

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Chapter Outline

Learning Objectives LO 1 Compute a target cost when the market determines

a product price. LO 2 Compute a target selling price using cost-plus

pricing. LO 3 Use time-and-material pricing to determine the cost

of services provided. LO 4 Determine a transfer price using the negotiated,

cost-based, and market-based approaches.

Target Costing LEARNING OBJECTIVE 1

Compute a target cost when the market determines a product price.

Illustration 8.1

LO 1

Target Costing

The price of a good or service is affected by many factors. • Company must have a good understanding of market

forces. • Where products are not easily differentiated from

competitor goods, prices are not set by the company, but rather by the laws of supply and demand—such companies are called price takers.

• Where products are unique or clearly distinguishable from competitor goods, prices are set by the company.

LO 1

Target Costing Establishing a Target Cost • Laws of supply and demand significantly affect product

price. • To earn a profit, companies must focus on controlling

costs. • Requires setting a target cost that will provide the

company’s desired profit.

LO 1

Establishing a Target Cost Target cost as related to price and profit • Target cost: Cost that provides the desired profit when

the market determines a product’s price. Illustration 8.2

Market Price − Desired Profit = Target Cost • If a company can reach its sales targets, produce its

product for the target cost or less, it will meet its profit goal.

LO 1

Establishing a Target Cost Other considerations • First, company should identify the segment of the

market where it wants to compete. • Second, company conducts market research to

determine the desirable features its products should have and the optimal market price for those products.

• Third, company determines its target cost by setting a desired profit.

• Last, company assembles a team to develop a product to meet the company’s goals.

LO 1

DO IT! 1: Target Costing

Fine Line Phones is considering introducing a fashion cover for its phones. Market research indicates that 200,000 units can be sold if the price is no more than $20. If Fine Line decides to produce the covers, it will need to invest $1,000,000 in new production equipment. Fine Line requires a minimum rate of return of 25% on all investments. Determine the target cost per unit for the cover. The desired profit for this new product line is

$1,000,000 × 25% = $250,000 Each cover must result in profit of $250,000 ÷ 200,000 units = $1.25

Market price − Desired profit = Target cost per unit $20 − $1.25 = $18.75 per unit

LO 1

Target Costing Review Question Target cost related to price and profit means that: a. Cost and desired profit must be determined before selling

price. b. Cost and selling price must be determined before desired

profit. c. Price and desired profit must be determined before costs. d. Costs can be achieved only if the company is at full

capacity.

LO 1

Target Costing Review Answer Target cost related to price and profit means that: a. Cost and desired profit must be determined before selling

price. b. Cost and selling price must be determined before desired

profit. c. Answer: Price and desired profit must be determined

before costs. d. Costs can be achieved only if the company is at full

capacity.

LO 1

Cost-Plus and Variable-Cost Pricing

LEARNING OBJECTIVE 2

Compute a target selling price using cost-plus pricing.

Cost-Plus Pricing • In an environment with little or no competition, a

company may be able to set its own price. • When a company sets price, the price is normally a

function of product cost: cost-plus pricing. • Approach requires establishing a cost base and

adding a markup to determine a target selling price.

LO 2

Cost-Plus Pricing Relation of markup to cost and selling price

Selling Price − Cost = Markup (Profit) • In determining the proper markup, a company must

consider competitive and market conditions.

• Size of the markup (the “plus”) depends on the desired return on investment for the product:

Illustration 8.3

Cost + Markup = Target Selling Price

LO 2

Cost-Plus Pricing Unit variable cost Illustration: Thinkmore Products, Inc. is in the process of setting a selling price on its new video camera pen. It is a functioning pen that will record up to 2 hours of audio and video. The unit variable cost estimates for the new video camera pen are as follows.

Illustration 8.4

Per Unit

Direct materials $23

Direct labor 17

Variable manufacturing overhead 12

Variable selling and administrative expenses 8

Unit variable cost $60

LO 2

Cost-Plus Pricing Unit fixed cost, 10,000 units In addition, Thinkmore has the following unit fixed cost assuming production of 10,000 units.

Illustration 8.5

LO 2

Cost-Plus Pricing Calculation of markup and selling price Thinkmore has decided to price its new video camera pen to earn a 20% return on its investment (ROI) of $2,000,000.

Illustration 8.6

Illustration 8.7 Per Unit

Variable cost $60

Fixed cost 65

Total cost 125

Markup (desired ROI per unit) 40

Unit selling price (at 10,000 units) $165

LO 2

Cost-Plus Pricing Computations of markup percentage and selling price Use markup percentage on cost to determine the selling price:

Illustration 8.8

Illustration 8.9

LO 2

Cost-Plus Pricing Limitations of Cost-Plus Pricing • Advantage of cost-plus pricing: Simple to compute. • Disadvantages:

o Does not consider demand side: • Will the customer pay the price?

o Unit fixed cost changes with change in sales volume: • At lower sales volume, company must charge higher price to

meet its desired ROI.

LO 2

Limitations of Cost-Plus Pricing Unit fixed cost, 5,000 units Illustration: If budgeted sales volume for Thinkmore’s products was 5,000 instead of 10,000, Thinkmore’s unit variable cost would remain the same. However, the unit fixed cost would change as follows.

Illustration 8.10

Thinkmore's desired 20% ROI now results in a $80 ROI per unit [(20% × $2,000,000) ÷ 5,000].

LO 2

Limitations of Cost-Plus Pricing Computation of selling price, 5,000 units Thinkmore computes the selling price at 5,000 units as follows.

Illustration 8.11 Per Unit

Variable cost $60

Fixed cost 130

Total cost 190

Markup (desired ROI per unit) 80

Unit selling price (at 5,000 units) $270

At 5,000 units, how much would Thinkmore mark up its total unit costs to earn a desired ROI of $80 per unit.

( ) ( )

$80 desired ROI per unit 42.11% =

$190 total unit cost

LO 2

Cost-Plus Pricing Review Question a. Selling price = variable cost + (markup percentage +

variable cost). b. Selling price = cost + (markup percentage × cost). c. Selling price = manufacturing cost + (markup

percentage + manufacturing cost). d. Selling price = fixed cost + (markup percentage ×

fixed cost).

LO 2

Cost-Plus Pricing Review Answer a. Selling price = variable cost + (markup percentage +

variable cost). b. Answer: Selling price = cost + (markup percentage ×

cost). c. Selling price = manufacturing cost + (markup

percentage + manufacturing cost). d. Selling price = fixed cost + (markup percentage ×

fixed cost).

LO 2

Variable-Cost Pricing

Alternative pricing approach: Simply add a markup to variable costs. • Avoids the problem of uncertain cost information related

to fixed-cost-per-unit computations. • Helpful in pricing special orders or when excess capacity

exists. Major disadvantage is that managers may set the price too low and fail to cover fixed costs.

LO 2

DO IT! 2: Target Selling Price

Air Corporation produces air purifiers. The following unit cost information is available: direct materials $16, direct labor $18, variable manufacturing overhead $11, variable selling and administrative expenses $6. Fixed selling and administrative expenses are $50,000, and fixed manufacturing overhead is $150,000. Using a 45% markup percentage on total per unit cost and assuming 10,000 units, compute the target unit selling price.

LO 2

DO IT! 2: Target Selling Price Solution Compute the unit target selling price. Direct materials $16

Direct labor 18

Variable manufacturing overhead 11

Variable selling and administrative expenses 6

Fixed selling and administrative expenses 5*

Fixed manufacturing overhead 15**

Total unit cost $71

Total unit cost

+ (Total unit cost

× Markup percentage) = Target unit

selling price

$71 + ($71 × 45%) = $102.95

*$50,000 ÷ 10,000; **$150,000 ÷ 10,000

LO 2

Time-and-Material Pricing LEARNING OBJECTIVE 3 Use time-and-material pricing to determine the cost of services provided.

Time-and-material pricing an approach in which the company uses two pricing rates: • One for labor used on a job—includes direct labor time and

other employee costs. • One for material—includes cost of direct parts and materials

and a material loading charge for overhead.

Widely used in service industries, especially professional firms such as public accounting, law, engineering, and consulting firms, as well as construction companies, repair shops, and printers.

LO 3

Time-and-Material Pricing Total annual budgeted time and material costs Illustration: Assume the following data for Lake Holiday Marina, a boat and motor repair shop.

Illustration 8.12

LO 3

Step 1: Calculate the Labor Rate

• Express as a rate per hour of labor. • Rate includes:

o Direct labor cost (includes fringe benefits). o Selling, administrative, and similar overhead costs. o Allowance for desired profit (ROI) per hour of employee

time. • Labor rate for Lake Holiday Marina for 2022 based on:

o 5,000 annual labor hours. o Desired profit margin of $8 per hour of labor.

LO 3

Step 1: Calculate the Labor Rate Computation of hourly time-charge rate

Illustration 8.13

Multiply the rate of $38.20 by the number of hours of labor used on any particular job to determine the labor charges for the job.

LO 3

Step 2: Calculate Material Loading Charge

• Material loading charge added to invoice price of materials. • Covers the costs of purchasing, receiving, handling, and

storing materials plus desired profit margin on materials. • Expressed as a percentage of estimated costs of parts and

materials for the year: o Estimate total annual costs for purchasing, receiving

handling, and storing materials o Divide that amount by total estimated cost of parts and

materials o Add a desired profit margin

LO 3

Step 2: Calculate Material Loading Charge Computation of material loading charge Lake Holiday Marina estimates the total invoice cost of parts and materials used in 2022 will be $120,000. The marina desires a 20% profit margin on the invoice cost of parts and materials.

Illustration 8.14

LO 3

Step 3: Calculate Charges for a Particular Job

Labor charges +

Material charges +

Material loading charge

LO 3

Step 3: Calculate Charges for a Particular Job Price quotation for time and material Lake Holiday Marina prepares a price quotation to estimate the cost to refurbish a used 28-foot pontoon boat. Lake Holiday Marina estimates the job will require 50 hours of labor and $3,600 in parts and materials.

Illustration 8.15

LO 3

DO IT! 3: Time-and-Material Pricing

Presented below are data for Harmon Electrical Repair Shop for next year. The desired profit margin per labor hour is $10. The material loading charge is 40% of invoice cost. Harmon estimates that 8,000 labor hours will be worked next year.

Repair-technicians’ wages $130,000

Fringe benefits 30,000

Overhead 20,000

If Harmon repairs a TV that takes 4 hours to repair and uses parts costing $50, compute the bill for this job.

LO 3

DO IT! 3: Time-and-Material Pricing Solution

LO 3

Transfer Prices

LEARNING OBJECTIVE 4

Determine a transfer price using the negotiated, cost- based, and market-based approaches.

Vertically integrated companies • Grow in direction of either its suppliers or its

customers. • Frequently transfer goods to other divisions as well as

outside customers.

LO 4

Transfer Prices Transfer pricing example How do you price goods “sold” within the company?

Illustration 8.16

LO 4

Transfer Prices Three possible approaches Transfer price—price used to record the transfer between two divisions of a company. • Ways to determine a transfer price:

1. Negotiated transfer prices. 2. Cost-based transfer prices. 3. Market-based transfer prices.

• Conceptually - a negotiated transfer price is best. • Due to practical considerations, companies often use the other

two methods.

LO 4

Negotiated Transfer Prices

Illustration: Alberta Company makes rubber soles for work boots & hiking boots. • Two Divisions:

o Sole Division - sells soles externally. o Boot Division - makes leather uppers for hiking boots

which are attached to purchased soles. • Division managers compensated on division

profitability. • Management now wants Sole Division to provide at

least some soles to the Boot Division. LO 4

Negotiated Transfer Prices Contribution margin for two divisions Computation of contribution margin per unit for two divisions, when Boot Division purchases soles from an outside supplier.

Illustration 8.17

“What would be a fair transfer price if the Sole Division sold 10,000 soles to the Boot Division?”

LO 4

Negotiated Transfer Prices No Excess Capacity • If Sole sells to Boot,

o payment must at least cover variable cost per unit plus o lost contribution margin per sole (opportunity cost).

• The minimum transfer price acceptable to Sole is:

Illustration 8.18

LO 4

Negotiated Transfer Prices Transfer price negotiations—no excess capacity

The most Boot Division (the buyer) will pay is what the sole would cost from an outside supplier.

Illustration 8.19

LO 4

Negotiated Transfer Prices Excess Capacity • Can produce 80,000 soles, but can sell only 70,000 in the

open market.

• Available capacity of 10,000 soles.

• Contribution margin of $7 per unit is not lost.

• Minimum transfer price acceptable to Sole:

Illustration 8.20

LO 4

Negotiated Transfer Prices Transfer pricing negotiations—excess capacity In this case, the Boot Division and the Sole Division should negotiate a transfer price within the range of $11 to $17.

Illustration 8.21

LO 4

Negotiated Transfer Prices Variable Costs • In the minimum transfer price equation, variable cost is

the variable cost of units sold internally. • May differ—higher or lower—for units sold internally

versus those sold externally. • The minimum transfer pricing formula can still be used —

just use the internal variable costs.

LO 4

Negotiated Transfer Prices Summary • Transfer prices established:

o Minimum by selling division. o Maximum by the purchasing division.

• Often not used because: o Market price information sometimes not easily obtainable. o Lack of trust between the two negotiating divisions. o Different pricing strategies between divisions.

LO 4

Cost-Based Transfer Prices

• Uses costs incurred by division producing the goods or services as its foundation.

• May be based on variable costs alone or on variable costs plus fixed costs.

• Selling division may also add markup. • Can result in improper transfer prices causing:

o Loss of profitability for company. o Unfair evaluation of division performance.

LO 4

Cost-Based Transfer Prices Cost-based transfer price—10,000 units Illustration: Alberta Company requires the division to use a transfer price based on the variable cost of the sole. With no excess capacity, contribution margins per unit for the two divisions are:

Illustration 8.24

LO 4

Cost-Based Transfer Prices Conclusions • Cost-based pricing is bad deal for Sole Division—no profit

on transfer of 10,000 soles to Boot Division and loses profit of $70,000 on external sales.

• Boot Division is very happy; increases contribution margin by $6 per boot.

• If Sole Division has excess capacity, the division reports a zero profit on these 10,000 units and the Boot Division gains $6 per unit.

LO 4

Cost-Based Transfer Prices Cost-based transfer price results • Overall, the Company is worse off by $10,000.

Illustration 8.25

• Does not reflect the division’s true profitability nor provide adequate incentive for the division to control costs.

LO 4

Market-Based Transfer Prices

• Based on existing market prices of competing goods. • Often considered best approach because it is objective and

generally provides the proper economic incentives. • It is indifferent between selling internally and externally if

can charge/pay market price. • Can lead to bad decisions if have excess capacity. • Why? No opportunity cost. • Where there is not a well-defined market price, companies

use cost-based systems.

LO 4

Market-Based Transfer Prices Review Question

The Plastics Division of Weston Company manufactures plastic molds and then sells them for $70 per unit. Its unit variable cost is $30, and its unit fixed cost is $10. Management would like the Plastics Division to transfer 10,000 of these molds to another division within the company at a price of $40. The Plastics Division is operating at full capacity. What is the minimum transfer price that the Plastics Division should accept? a. $10 b. $30 c. $40 d. $70

LO 4

Market-Based Transfer Prices Review Answer

LO 4

Effect of Outsourcing on Transfer Pricing Outsourcing - Contracting with an external party to provide a good or service, rather than doing the work internally. • Virtual companies outsource all of their production. • Use incremental analysis to determine if outsourcing is

profitable. • As companies rely on outsourcing, fewer components are

transferred internally thereby reducing the need for transfer pricing.

LO 4

Transfers Between Divisions in Different Countries Companies “globalize” their operations • Going global increases transfers between divisions located

in different countries. • 60% of trade between countries is estimated to be

transfers between divisions. • Different tax rates make determining appropriate transfer

price more difficult.

LO 4

DO IT! 4: Transfer Pricing Part (a) The clock division of Control Central Corporation manufactures clocks and then sells them to customers for $10 per unit. Its unit variable cost is $4, and its unit fixed cost is $2.50. Management would like the clock division to transfer 8,000 of these clocks to another division within the company at a price of $5. The clock division could avoid $0.50 per clock of variable packaging costs by selling internally. (a) Determine the minimum transfer price, assuming the clock division is not operating at full capacity.

Minimum transfer price = Variable cost + Opportunity cost

$3.50 = $3.50 + $0

LO 4

DO IT! 4: Transfer Pricing Part (b) The clock division of Control Central Corporation manufactures clocks and then sells them to customers for $10 per unit. Its unit variable cost is $4, and its unit fixed cost is $2.50. Management would like the clock division to transfer 8,000 of these clocks to another division within the company at a price of $5. The clock division could avoid $0.50 per clock of variable packaging costs by selling internally. (b) Determine the minimum transfer price, assuming the clock division is operating at full capacity.

Minimum transfer price = Variable cost + Opportunity cost

$9.50 = $3.50 + $6

LO 4

Absorption-Cost and Variable-Cost Pricing

LEARNING OBJECTIVE *5

Determine prices using absorption-cost pricing and variable-cost pricing.

Full-Cost Pricing • Conceptually, it makes sense to use total cost as the basis

of the markup. • However, total cost is difficult to determine in practice. • Thus, some companies use two other cost approaches:

(1) absorption-cost pricing or (2) variable-cost pricing.

LO 5

Appendix 8A: Absorption-Cost and Variable-Cost Pricing Absorption-Cost Pricing • Includes variable and fixed manufacturing costs. • Variable and fixed selling and administrative costs

excluded. • Steps in approach:

1. Compute the unit manufacturing cost. 2. Compute markup percentage – must cover desired ROI

as well as selling/administrative expenses. 3. Set target selling price.

LO 5

Absorption-Cost Pricing Computation of unit manufacturing cost/other data

Illustration 8A.1 Per Unit

Direct materials $23

Direct labor 17

Variable manufacturing overhead 12

Fixed manufacturing overhead ($350,000 ÷ 10,000) 35

Total unit manufacturing cost (absorption cost) $87

Illustration 8A.2

Variable selling and administrative expenses $ 8

Fixed selling and administrative expenses ($300,000 ÷ 10,000) 30

Total selling and administrative expenses per unit $ 38

Desired ROI per unit (see Illustration 8.6) $ 40

LO 5

Absorption-Cost Pricing Markup percentage

Illustration 8A.3

Solving, we find: MP = ($40 + $38) ÷ $87 = 89.66%

LO 5

Absorption-Cost Pricing Computation of target price

Illustration 8A.4

Because of fixed costs, if more than 10,000 units are sold, the ROI will be greater than 20% and vice versa.

LO 5

Absorption-Cost Pricing Proof of 20% ROI

Illustration 8A.5

LO 5

Absorption-Cost Pricing Reasons for using absorption-cost pricing Most companies that use cost-plus pricing use either absorption cost or full cost as the basis. Reasons: 1. Information readily available—cost-effective. 2. Use of only variable costs may result in too low a price—

repeated price cutting. 3. Most defensible base for justifying prices.

LO 5

Variable-Cost Pricing Concepts • Cost base consists of all variable costs associated with

a product—manufacturing, selling, administrative. • Since fixed costs are not included in base, markup

must provide for fixed costs and the target ROI. • Useful for making short-run decisions.

LO 5

Variable-Cost Pricing Steps 1. Compute the unit variable cost. 2. Compute markup percentage. 3. Set target selling price.

LO 5

Variable-Cost Pricing Computation of unit variable cost

Illustration 8A.6

Per Unit

Direct materials $23

Direct labor 17

Variable manufacturing overhead 12

Variable selling and administrative expense 8

Total unit variable cost $60

LO 5

Variable-Cost Pricing Computation of markup %—variable-cost pricing

Illustration 8A.7

Solving, we find:

( )$40 + $35 + $30 MP = = 175%

$60

LO 5

Variable-Cost Pricing Computation of target price—variable-cost pricing

Illustration 8A.8

Using the $165 target price produces the desired 20% ROI at a volume level of 10,000 units.

LO 5

Variable-Cost Pricing Proof of 20% ROI—variable-cost approach

Illustration 8A.9

LO 5

Variable-Cost Pricing Advantages Avoids blurring effects of cost behavior on operating income. Reasons: 1. More consistent with CVP analysis. 2. Provides data for pricing special orders by showing

incremental cost of accepting one more order. 3. Avoids arbitrary allocation of common fixed costs to

individual product lines.

LO 5

Transfers Between Divisions in Different Countries

LEARNING OBJECTIVE *6

Explain issues involved in transferring goods between divisions in different countries.

Transfers Between Divisions in Different Countries • Companies must pay income tax in the country where they

generate the income. • In order to maximize income and minimize income tax, some

companies attempt to report more income in countries with low tax rates, and less income in countries with high tax rates.

• They accomplish this by adjusting the transfer prices they use on internal transfers between divisions located in different countries.

LO 6

Appendix 8B: Transfers Between Divisions in Different Countries Illustration: Alberta’s Boot Division is located in a country with a corporate tax rate of 10%, and the Sole Division is located in a country with a tax rate of 30%. The following illustrates the after-tax contribution margin per unit under transfer prices of $18 versus $11.

LO 6

Transfers Between Div. in Diff. Countries After-tax cont. margin per unit at $18 transfer price

Illustration 8B.1

LO 6

Transfers Between Div. in Diff. Countries After-tax cont. margin per unit at $11 transfer price

Illustration 8B.1 (continued)

LO 6

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Managerial Accounting
Chapter Outline
Target Costing
Target Costing
Target Costing�Establishing a Target Cost
Establishing a Target Cost�Target cost as related to price and profit
Establishing a Target Cost�Other considerations
DO IT! 1: Target Costing
Target Costing�Review Question
Target Costing�Review Answer
Cost-Plus and Variable-Cost Pricing
Cost-Plus Pricing �Relation of markup to cost and selling price
Cost-Plus Pricing�Unit variable cost
Cost-Plus Pricing�Unit fixed cost, 10,000 units
Cost-Plus Pricing�Calculation of markup and selling price
Cost-Plus Pricing�Computations of markup percentage and selling price
Cost-Plus Pricing�Limitations of Cost-Plus Pricing
Limitations of Cost-Plus Pricing�Unit fixed cost, 5,000 units
Limitations of Cost-Plus Pricing�Computation of selling price, 5,000 units
Cost-Plus Pricing�Review Question
Cost-Plus Pricing�Review Answer
Variable-Cost Pricing
DO IT! 2: Target Selling Price
DO IT! 2: Target Selling Price�Solution
Time-and-Material Pricing
Time-and-Material Pricing�Total annual budgeted time and material costs
Step 1: Calculate the Labor Rate
Step 1: Calculate the Labor Rate�Computation of hourly time-charge rate
Step 2: Calculate Material Loading Charge
Step 2: Calculate Material Loading Charge�Computation of material loading charge
Step 3: Calculate Charges for a Particular Job
Step 3: Calculate Charges for a Particular Job�Price quotation for time and material
DO IT! 3: Time-and-Material Pricing
DO IT! 3: Time-and-Material Pricing�Solution
Transfer Prices
Transfer Prices�Transfer pricing example
Transfer Prices�Three possible approaches
Negotiated Transfer Prices
Negotiated Transfer Prices�Contribution margin for two divisions
Negotiated Transfer Prices�No Excess Capacity
Negotiated Transfer Prices�Transfer price negotiations—no excess capacity
Negotiated Transfer Prices�Excess Capacity
Negotiated Transfer Prices�Transfer pricing negotiations—excess capacity
Negotiated Transfer Prices�Variable Costs
Negotiated Transfer Prices�Summary
Cost-Based Transfer Prices
Cost-Based Transfer Prices�Cost-based transfer price—10,000 units
Cost-Based Transfer Prices�Conclusions
Cost-Based Transfer Prices�Cost-based transfer price results
Market-Based Transfer Prices
Market-Based Transfer Prices�Review Question
Market-Based Transfer Prices�Review Answer
Effect of Outsourcing on Transfer Pricing
Transfers Between Divisions in Different Countries
DO IT! 4: Transfer Pricing�Part (a)
DO IT! 4: Transfer Pricing�Part (b)
Absorption-Cost and Variable-Cost Pricing
Appendix 8A: Absorption-Cost and Variable-Cost Pricing�Absorption-Cost Pricing
Absorption-Cost Pricing�Computation of unit manufacturing cost/other data
Absorption-Cost Pricing�Markup percentage
Absorption-Cost Pricing�Computation of target price
Absorption-Cost Pricing�Proof of 20% R O I
Absorption-Cost Pricing�Reasons for using absorption-cost pricing
Variable-Cost Pricing�Concepts
Variable-Cost Pricing�Steps
Variable-Cost Pricing�Computation of unit variable cost
Variable-Cost Pricing�Computation of markup %—variable-cost pricing
Variable-Cost Pricing�Computation of target price—variable-cost pricing
Variable-Cost Pricing�Proof of 20% R O I—variable-cost approach
Variable-Cost Pricing�Advantages
Transfers Between Divisions in Different Countries
Appendix 8B: Transfers Between Divisions in Different Countries
Transfers Between Div. in Diff. Countries�After-tax cont. margin per unit at $18 transfer price
Transfers Between Div. in Diff. Countries�After-tax cont. margin per unit at $11 transfer price
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