Variable costs of production include materials, labor, purchased components, and so on. The variable cost, the fixed cost, and the one-to-one profit, combine the selling price. It is interesting to see how companies determine the competitive price. But the market is not the least interested in the costs. Finally, the actual profit per unit will be the critical factor.
Similarly, the organization's operating costs (rents, fees, energy, maintenance, administrative and administrative costs) are aggregated and divided by the number of units to be sold to ensure a fixed cost per unit. In other words, the costs underlying the calculation of prices should be changed to take into account what customers want and what they are prepared to pay if maximum profits are to be obtained.
Even though the way in which the price is simply calculated is a lower pricing method. This approach is used by many companies producing large product ranges since they allow a complex situation to be undermined by disciplined auditing by standard accounting methods.
The first problem is to assume that costs are causing people. Developing a cost-plus approach to price determination is the use of cost norms. ultimately, the necessary profits are added per unit. Thus, if fixed costs fall down, sales prices and selling prices will also be reduced. The standard cost system, total cost calculation, total cost pricing, or any name are used, in this method, fixed costs are categorized as percentages.
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