- Identify the various categories of product cost.
- Describe the method of allocating overhead costs.
- Relate the way in which business managers make break-even decisions.
- Define the transfer price of a product or service.
- Explain how to determine segment margin for a business.
- Explain activity-based costing.
Skill Level Intermediate
- Is there really a clothing retailer that tells you exactly what it costs them to make their clothes? - The materials, the labor, the overhead, the transportation costs, and that they also report their markup? - Yes, they also report their markup. - So, who is it? - We'll tell 'em later. - Ah, okay. Then why is the price that I pay for my plane ticket not adjusted for the fact that I never make any special requests and, as a result, I don't create any extra cost for the airline. - [Kay] Well, that's as simple as A-B-C, activity-based costing. - [Jim] Tell me this, do supermarkets really sell items at below-cost? - [Kay] And is that legal? - Hi, I'm Jim Stice. I'm a professor of accounting at Brigham Young University. This is my brother, Kay. - I'm also a professor of accounting at Brigham Young University. - Come, join us in this course on cost-based pricing.