Cost and Price Analysis

Now the unforeseen issues associated using this type of contract could be very risky for the buyer. For example, a moving company agrees on stated price to relocate a local bakery into another location. During the process of relocation the moving company discovers items mounted on the wall; requiring additional tools and labor. Using this type of contract the moving company would charge additional cost to complete this moving project. Now the seller is at a major disadvantage due to the unknowns. The seller’s disadvantage proves the last resource to be sacrificed is the cost (Kerzner,

3.3 How is the standard price used in the accounting system? (Think about what you did in your cost/managerial accounting class.)

| (TCO C) Compare and contrast a firm fixed-price contract with a cost-plus contract. When would each be appropriate for

Good morning. The customer has been offered the $750.00, but is now stating that there may be more product that we missed. I have not been able to find anything else, but she will be sending those invoices in. They also are requesting at least partial compensation on the original labor or the new labor. She is going to discuss with her partner and get back to me today with a dollar amount. Ms. Oh did state that she is willing to take off the reviews once an amicable settlement is reached as she is willing to work with us. I will update everyone once the customer reaches back out.

Not considering all these price components will lead to an incorrect calculation of dead-net price. Other pricing components and factor that need to be considered include: Proper valuation of goods given or received such as:

3. If the contract doesn’t have applicable and similar cost in it, the contractor should propose a cost and submit to the stakeholders to get a approval, and carry out.

(Figure 1). This continuum helps describe how pricing methods can best be used to address particular pricing issues based on the level of competition needed to be considered and the depth of pricing knowledge needed.

Air-a-plane Corporation v. the United States, 408 F.2d 1030 (Ct. Cl. 1969), is the first case I’m going discuss in which cardinal change was used for the basis of a law suit. Air-A-Plane Corporation sign a contract with the Army Chemical Corps to make over 1100 smoke generators which were designated to be M3A1. The total fixed-price contract price was $607,101.04. The major issue that occur with the agreement was the large number of changes made by the Government after the contract was awarded. Yes, the contain the clause governing changes that allowed Army Chemical Corps to change or modify the work required but Air-A-Plane Corporation did not expect such a large number of changes. “This belief was based principally on the fact that the contract, by way of detailed and comprehensive specifications and drawings, described the contract items minutely. This belief was apparently also based in part upon the fact that the contract was a fixed price contract." (Justia, 1969). For the first issue the board found that a large number of changes were made after the contract was awarded. Whether they look at the number Air-A-Plane Corporation submitted or the one Army Chemical Corps submitted, the number was still large. “The first change

Instead, the buyers’ only notable out would be a tightly drafted material adverse change (“MAC”) clause - and the buyers were well aware that the threshold for adverse events to qualify as a MAC is extremely high in Delaware courts.60

Can you name some key legal and commercial terms we can expect to see on a prime contract?

said, no contract price can ever be completely ‘fixed’ as, for example, it will inevitably

Issue 1 & Sub Issues 1.1 and 1.2: the price tag is not an offer made by VG to J – it is an Invitation to treat which J cannot accept. There is no indication on the facts given that VG had expressed any intention to be legally bound by the provisions of the

Setting prices for new products is not easy since there is no existing base to start from. Market research becomes crucial for this type of product. Fanack, a Japanese company, uses a simple formula that sets the price at a level that gives them a five-year lead over their competitors. Another technique is to use the prices for substitute products to develop an initial prices. For example, fiber optic cable prices may form the basis for pricing satellite-based communication links.

71. What are the different market structures? 72. Mention the features of market? 73.

Pricing Techniques: are the methods adopted by a firm to set its selling price. It usually depends on the firm's average costs, and on the customer's perceived value of the product in comparison to his or her perceived value of the competing products. Different pricing methods place varying degree of emphasis on selection, estimation, and evaluation of costs, comparative analysis, and market situation. It takes into view factors such as a firm's overall marketing objectives, consumer demand, product attributes, competitors' pricing, and market and economic trends. The term pricing technique is also called cost plus because it attempts to