From the course: Accounting Foundations: Cost-Based Pricing Strategies
Join today to access over 22,600 courses taught by industry experts or purchase this course individually.
Pricing in a fixed-cost setting
From the course: Accounting Foundations: Cost-Based Pricing Strategies
Pricing in a fixed-cost setting
- In some industries, the large majority of costs are fixed. The cost is the same no matter how many customers come. Two examples of such industries are the hotel industry and the airline industry. We will do an example using numbers from the Chinese airline industry to see the interaction between cost and pricing in a fixed cost industry. We will use numbers from a financial statement analysis case that my brother and I often teach. We will use the numbers from just one of those airlines in the case, China Eastern. China Eastern is based in the eastern coastal city of Shanghai, and is majority owned by the Chinese government. Now, here are some important financial and operating numbers for China Eastern. All financial numbers have been converted from their original reporting currency, the Chinese Yaun, into US Dollars using exchange rates prevailing at the time of the case, that's 2007. You can see that the variable cost…
Practice while you learn with exercise files
Download the files the instructor uses to teach the course. Follow along and learn by watching, listening and practicing.
Download courses and learn on the go
Watch courses on your mobile device without an internet connection. Download courses using your iOS or Android LinkedIn Learning app.