Price and Pricing Policy (MGTC3218)
Higher Institute of Commerce and Management (HICM)
Semester: Second Semester
Level: 300
Year: 2017
DEPARTMENT OF MARKETING & MANAGEMENT Level 200
TOPIC: COST-BASED PRICING
PRICING POLICY TUTORIALS
TOPIC: COST-BASED PRICING
EXERCISE 1
An enterprise produces an industrial product A. During the month of March 2014, it was placed .2 orders
and you are given the information below for the period:
1. Overheads expenses
a. The purchase process incurred fees that amount to 570,000 CFAF. The amount is' to share among pie
materials proportionally to the quantities , purchased. .
b. The production process involves three workshops Preparation, Polishing and Mounting. The charges
.accumulated under these workshops are 168,000, 1,150,000 and 1,300,000 CFAF respectively: Only the
Preparation costs are apportioned-according to the kg of material treated. The other workshop charges are
share out following the number of hours of direct labour.
1.
Initial stocks.
-
Materials A: 500kg at 950F at kg
-
Materials B: 200 kg at 700 F at kg
2.
Purchases:
-
Materials A: ' 2,000 kg at 900 F a kg
-
Materials B: 1,800 kg at 600 f a kg
3.
The production of the order N° 1 has consumed:
-
800 kg of Material A;
-
700 kg of Material B;
-
200 hours of labour in the factory workshop at 350 F an hour;
-
100 hours of labour in the mounting workshop at 400 F an hour.
4.
The production of the order hl° 2 has consumed:
-
1700 kg of Material A;
-
1300 kg of Material B;
-
300 hours of labour in the factory workshop at 350 F an hour;
-
215 hours of labour in the mounting workshop at 400 F an hour.
Work required: Knowing that the gross margin on sales is usually 25 %, calculate the price to offer for
of the order N°1 and 2.
The exits are evaluated at the weighted average cost method.
Mr Joseph Magloire NYOBE
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