Chapter 12

Making Smart Pricing Decisions: Figuring Total Costs

In This Chapter

arrow Understanding the impact of pricing on customer decisions

arrow Reviewing issues with special orders

arrow Thinking about short-term and long-term pricing issues

arrow Covering the concept of target costing

arrow Deciding which costs add value

Turn to any chapter in this book, and you’ll find topics about analyzing costs to reduce or eliminate them. Now, a logical next step is to use your total costs to price your product for a reasonable profit. Enter the fascinating world of pricing.

Managers make pricing decisions. They decide what to charge for their products or services. These decisions determine what and how much to produce. Ultimately, production decisions then determine spending.

In this chapter, you see how prices affect the buying habits of your customers (an inconvenient truth). This chapter defines product costing and target costing. You analyze whether a given cost adds value or if the cost flat-out isn’t needed. ...

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