# Accounting 102 CH8

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The flashcards below were created by user acelaker on FreezingBlue Flashcards.

1. Target Cost
Market Price - Desired Profit
2. Return on investment (ROI)
• Net income ÷ Invested assets
• ex: 1mil invst expt rnt 20% 1mil*.20=200K
• 10K units produced 200K÷10K=\$20 per unit
3. Target Selling Price
• Cost + (Markup % x Cost) or
• cost + ROI
4. Target Selling Price perU
• Total Unit Cost + (Totl Unt Cst x markup%) or
• total cost per unit + ROI per unit
5. Markup Percentage
Desired ROI perU ÷ Total Cost PerU
6. Time and material pricing
• 1) calculate the per hour labor charge rate
• (2) calculate the charge for obtaining and holding materials %
• (3) calculate the charges for a particular job
7. T/M Caluclate Labor Charge
• (1) DL cost of emplye, incldg hrly rt or salary & fringe benefits
• (3) an allownce for desired profit or ROI p/hr of emplye time
• ex: \$103K (mec wages)÷10K hrs (total hrs) = 10.3 (add all)
• (1) Est totl ann csts for purch, recv, hndl, & storing materials.
• (2) divides this amount by the totl est cst of parts and materials.
• (3) It adds a desired profit margin on the materials themselves
• ex: \$13K (matrl chg) ÷ \$130K = 10% (add all)
9. TM Calculate Charges for a paticular job
• (1) the labor charge
• (2) the charge for the materials
• ex: 12 hrs x \$50 rate + \$500 mat+(\$500 x 10%rate)
10. Possible approaches for determining a transfer price:
• 1. Negotiated transfer prices.
• 2. Cost-based transfer prices.
• 3. Market-based transfer prices.
11. Contrubution Margin (AKA Opportunity Cost)
Selling Price - Variable Price
12. Min Transfer Price No Excess Capacity
Variable Cost + Opportunity Cost (AKA Cont Margin)
13. Min Transfer Price Excess Capacity
Variable Cost + \$0 Opportunity Cost
14. Absorption cost pricing (GAAP aprvd)
• 1) Compute Unit manufacturing costs
• 2) Compute Markup Percentage using formula:
• Dsrd ROI pu+Selling/Admin Exp pu=Markup% x Mfg cost pu
• 3) Set target selling price using formula:
• Mfg cost pu + (markup% x Mfg cost pu)
15. Variable Cost Pricing
• 1) Compute unit variable cost
• 2) Compute Markup Percentage using formula:
• Dsrd ROI + Fxd Cost pu = Markup% x Variable Cost pu
• 3) Set target selling price using formula:
• Var Cost pu + (Markup% x Var Cost pu)

### Card Set Information

 Author: acelaker ID: 144794 Filename: Accounting 102 CH8 Updated: 2012-04-04 19:31:50 Tags: Acounting 102 Folders: Description: CH8 Show Answers:

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