How is the price of an item established in a target pricing contract?

Q: What is a transfer price? What are the three main approaches to setting transfer prices?

A: Transfer pricing:   Transfer pricing refers to the setting of prices for goods and services that are…

Q: Under what circumstances is relative sales value anappropriate basis for determining the price…

A: Relative sales value is an appropriate basis for pricing inventory when a group of changing units is…

Q: What is a price standard?

A: Variance: Variance refers to the difference level in the actual cost incurred and standard cost. The…

Q: On what basis should the transaction price be allocated to various performance obligations? Identify…

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Q: Explain how the lower of cost and net realizable value rule is applied to purchase commitments.

A: Purchase Commitments: It refers to the commitments or contract made by a company with its suppliers…

Q: How is standalone selling price defined?

A: Performance Obligation: Performance obligation refers to the obligation that the seller to provide…

Q: What alternative approaches can be used to estimate the stand-alone selling price of performance…

A: FASB: It is the financial accounting standards board.

Q: What is the net price and trade discount

A: The offering of multiple trade discounts by the business on the product sold to the customer is…

Q: When should special pricing orders be accepted?

A: Special pricing order: A special order is a unique one time order made by a customer. In this order…

Q: What is meant by the terms clean price and dirty price?

A: Clean price: The clean price is the price of a coupon bond does not comprise any accumulated…

Q: Distinguish between market-skimming pricing and market-penetration pricing.

A: Product pricing strategies: There are two product pricing strategies of a company. They are,…

Q: How to Allocate the Transaction Price to Each Performance Obligation?

A: In revenue recognition , following steps are done- first of all we determine whether there is a…

Q: Discuss the difference between: A. Contract of Sale and Contract to Sell B. Sale by Sample, Sale by…

A: Contract of Sale and Contract to sell the contract of sale, the exchange of goods takes place…

Q: What Is Prerequisites for Successful Target and Cost-Based Pricing?

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: FIFO cost of goods sold?

A: Goods available for sale Cost of goods sold + Ending inventory As per LIFO method,   Cost of…

Q: On what concept is the price-earnings multiple valuation approach based?

A: Price earning ratio is computed by dividing the market price of the share by the earnings per share.

Q: What are the optimal prices and profits for selling the goods seperately?

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: How to Determine the Transaction Price?

A: Definition:   Transaction price: Transaction price refers to the price that a corporation receives…

Q: Define the term “opportunity cost.” How may this cost be relevant in a make-or-buy decision?

A: Cost is defined as the total amount of money spent by the company for the production or creation of…

Q: What questions should managers answer when considering special pricing orders?

A: Definition:   Special Pricing: When businesses get Special orders from its customers for bulk…

Q: In which of the following purchase methods buying goods for taking advantage of favourable market…

A: Speculative purchasing is a method in which goods are purchased by taking advantage of favourable…

Q: What is a transaction price?

A: Transaction price: It is the price of a service or a good which is expressed relative to the similar…

Q: What is a forward contract?

A: Introduction: This question is related to the concept of financial derivatives. Derivative…

Q: What is mark-to-market?

A: Market to market is an equipment that can become different the value on either side of balance…

Q: Which of the following transfer price approaches is used when the transfer price is set at the…

A: Transfer Price  : Price at which related parties transact with each other is known as transfer…

Q: Distinguish between par value and issue price.

A: Solution: Par value is a value assigned to a financial instrument issued by the company. It is…

Q: Explain how negotiation between the supplying and buying units may be used to set transfer prices.…

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: Describe the uses of target pricing.

A: Target pricing: A pricing method which is used to identify the price at which the product will be…

Q: What is a quantity standard? What is a price standard?

A: Quantity Standard : A quantity standard is the amount of an input, such as labor time or raw…

Q: What is importants of Price and quality?

A: Price plays an important role for buyers and sellers both because the seller wants to charge a high…

Q: What Is Fixed-Price Contract with Redetermination?

A: A fixed-price contract with prospective price redetermination provides for-       (a) A firm fixed…

Q: Conceptually, how would you evaluate a quantity discount offerfrom a supplier?

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Q: what are the advantages of calculating a supplier performance index?

A: Supplier Performance Index: A supplier performance index is used to determine the total cost of…

Q: What Is Cost-Based Contracts?

A: Cost plus contracts is defined as an agreement for reimbursement of the company regarding an…

Q: Describe the approaches to estimate stand-alone selling prices.

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Q: Explain how to allocate the transaction price to each performance obligation.

A: If a customer receives a discount for acquiring a bundle of goods or services, the entity should…