Chapter 22 Pricing

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Learning Objectives

After studying this chapter, you should be able to:

  1. Compute a target cost when the market determines a product price.
  2. Compute a target selling price using cost-plus pricing.
  3. Use time-and-material pricing to determine the cost of services provided.
  4. Determine a transfer price using the negotiated, cost-based, and market-based approaches.
  5. Explain issues involved in transferring goods between divisions in different countries.

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Feature Story

They've Got Your Size—and Color

Nick Swinmum was shopping for a pair of shoes. He found a store with the right style, but not the right color. The next store had the right color, but not the right size. After visiting numerous stores, he went home, figuring he would buy them on the Web. After all, it was 1999, so you could buy everything on the Web, right? Well, apparently not shoes. After an exhaustive search, Nick still came up shoeless.

Nick lived in San Francisco, where, in 1999, everybody with even half an idea started an Internet company and became a millionaire. Or so it seemed. So Nick started Zappos.com. The company is dedicated to providing the best selection in shoes in terms of brands, styles, colors, ...

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