Page

8-1
 Pricing
Pricing

Managerial Accounting
Fifth Edition
Weygandt Kimmel Kieso
Page
8-2
 study objectives
1. Compute a target cost when the market determines
a product price.

2. Compute a target selling price using cost-plus

pricing.

3. Use time-and-material pricing to determine the cost

of services provided.

4. Determine a transfer price using the negotiated,

cost-based, and market-based approaches.

5. Explain issues involved in transferring goods

between divisions in different countries.
Page
8-3
 preview of chapter 8

Page
8-4
 External
External Sales
Sales
The price of a good or service is affected by many
factors.
Illustration 8-1

Regardless of the factors involved, the price must

cover the costs of the good or service as well as
earn a reasonable profit.
Page
8-5
 External
External Sales
Sales

To determine an appropriate price, a company must

have a good understanding of market forces.

Where products are not easily differentiated from

competitor goods, prices are not set by the
company, but rather by the laws of supply and
demand – such companies are called price takers.

Where products are unique or clearly distinguishable

from competitor goods, prices are set by the
company.

Page
8-6
 Target
Target Costing
Costing

In a highly competitive industry, the laws of supply

and demand significantly affect product price.

No company can affect the price to a significant

extent so, to earn a profit, companies must focus
on controlling costs.

This requires setting a target cost that will provide

the company’s desired profit.

Page
8-7 SO 1 Compute a target cost when the market determines a product pric
 Target
Target Costing
Costing

Target cost: Cost that provides the desired profit

on a product when the market determines a
product’s price.
Illustration 8-2

If a company can produce its product for the target

cost or less, it will meet its profit goal.

Page
8-8 SO 1 Compute a target cost when the market determines a product pric
 Target
Target Costing
Costing

First, a company should identify its market niche

where it wants to compete.

Second, the company conducts market research

to determine the target price – the price the
company believes will place it in the optimal
position for the target consumers.

Third, the company determines its target cost by

setting a desired profit.

Last, the company assembles a team to develop a

product to meet the company’s goals.
Page
8-9 SO 1 Compute a target cost when the market determines a product pric
 Target
Target Costing
Costing
KRC Phones, Inc. is considering introducing a
fashion cover for its phones. Market
research indicates that 200,000 units can be sold if the price
is no more than $20. If Fine Line decides to produce the
covers, it will need to invest $1,000,000 in new production
equipment. Fine Line requires a minimum rate of return of
25% on all investments. Determine the target cost per unit
for the cover.
The desired profit for this new product line is
$1,000,000 x 25% = $250,000

Each cover must result in profit of $250,000 / 200,000 units =

$1.25
Solution
Market price - Desired profit= Target cost per unit on notes
Page page
8-10 $20 a target cost
SO 1 Compute $1.25 $18.75
when the market per unit
determines a product pric
 Target
Target Costing
Costing

Review Question
Target cost related to price and profit means that:
a. Cost and desired profit must be determined
before selling price.
b. Cost and selling price must be determined
before desired profit.
c. Price and desired profit must be determined
before costs.
d. Costs can be achieved only if the company is
at full capacity. Solution
on notes
Page page
8-11 SO 1 Compute a target cost when the market determines a product pric
 Cost-Plus
Cost-Plus Pricing
Pricing

In an environment with little or no competition, a

company may have to set its own price.

When a company sets price, the price is normally a

function of product cost: cost-plus pricing.

Approach requires establishing a cost base and

adding a markup to determine a target selling price.

Size of the markup (the “plus”) depends on the

desired return on investment for the product:

ROI = net income ÷ invested assets

Page
8-12 SO 2 Compute a target selling price using cost-plus pricin
 Cost-Plus
Cost-Plus Pricing
Pricing

In determining the proper markup, a company

must consider competitive and market conditions

Cost-plus formula is expressed as:

Illustration 8-3

Page
8-13 SO 2 Compute a target selling price using cost-plus pricin
 Cost-Plus
Cost-Plus Pricing
Pricing

Illustration: Cleanmore Products, Inc. is in the

process of setting a selling price on its new top-of-the-
line, 3-horsepower, 16-gallon, variable-speed
wet/dry shop vacuum. The per unit variable cost
estimates for the new shop vacuum are as follows.
Illustration 8-4

Page
8-14 SO 2 Compute a target selling price using cost-plus pricin
 Cost-Plus
Cost-Plus Pricing
Pricing

In addition, Cleanmore has the following fixed costs per

unit at a budgeted sales volume of 10,000 units.
Illustration 8-5

Page
8-15 SO 2 Compute a target selling price using cost-plus pricin
 Cost-Plus
Cost-Plus Pricing
Pricing

Cleanmore has decided to price its new shop vacuum to earn a

20% return on its investment (ROI) of $1,000,000.

Markup = 20% ROI of $1,000,000

Expected ROI = $200,000 ÷ 10,000 units = $20

Sales price per unit =

Illustration 8-6
Solution
Page
on notes
8-16
page
SO 2 Compute a target selling price using cost-plus pricin
 Cost-Plus
Cost-Plus Pricing
Pricing

Use markup on cost to set a selling price:

Compute the markup percentage to achieve a

desired ROI of $20 per unit:
Illustration 8-7

Compute the target selling price:

Illustration 8-8

Page Solution
8-17 on notes SO 2 Compute a target selling price using cost-plus pricin
page
 Cost-Plus
Cost-Plus Pricing
Pricing

Limitations of Cost-Plus Pricing

Advantage of cost-plus pricing: Easy to compute.

Disadvantages:
 Does not consider demand side:
 Will the customer pay the price?

 Fixed cost per unit changes with change in sales

volume:
 At lower sales volume, company must charge
higher price to meet desired ROI.
Page
8-18 SO 2 Compute a target selling price using cost-plus pricin
 Cost-Plus
Cost-Plus Pricing
Pricing

Illustration: If budgeted sales volume for Cleanmore

Products was 8,000 instead of 10,000, Cleanmore’s
variable cost per unit would remain the same. However,
the fixed cost per unit would change as follows.
Illustration 8-9

Cleanmore’s desired 20% ROI now results in a $25 ROI

per unit [(20% x $1,000,000) / 8,000].
Page
8-19 SO 2 Compute a target selling price using cost-plus pricin
 Cost-Plus
Cost-Plus Pricing
Pricing

Cleanmore computes the selling price at 8,000 units as

follows. Illustration 8-10

At 8,000 units, how much would Cleanmore mark up its

total unit costs to earn a desired ROI of $25 per unit.

Page Solution
8-20 on notes SO 2 Compute a target selling price using cost-plus pricin
page
 Variable-Cost
Variable-Cost Pricing
Pricing

Alternative pricing approach:

Simply add a markup to variable costs.
 Avoids the problem of uncertain cost information
related to fixed-cost-per-unit computations.
 Helpful in pricing special orders or when excess
capacity exists.

Major disadvantage:

Managers may set the price too low and fail to

cover fixed costs.

Page
8-21 SO 2 Compute a target selling price using cost-plus pricin
 Variable-Cost
Variable-Cost Pricing
Pricing
KRC Air Corporation produces air purifiers.
Using a 45% markup percentage on total per
unit cost, compute the target selling price.

Page Solution
8-22 on notes SO 2 Compute a target selling price using cost-plus pricin
page
 Variable-Cost
Variable-Cost Pricing
Pricing

Review Question
Cost-plus pricing means that:
a. Selling price = variable cost + (markup
percentage + variable cost).
b. Selling price = cost + (markup percentage X
cost).
c. Selling price = manufacturing cost + (markup
percentage + manufacturing cost).
d. Selling price = fixed cost + (markup
percentage X fixed cost).
Page Solution
8-23 on notes SO 2 Compute a target selling price using cost-plus pricin
page
 Time-and-Material
Time-and-Material Pricing
Pricing

An approach to cost-plus pricing in which the

company uses two pricing rates:
 One for the labor used on a job - includes direct
labor time and other employee costs.
 One for the material - includes cost of direct
parts and materials and a material loading charge
for related overhead.

Widely used in service industries, especially

professional firms such as:

Public Accounting, Law, Engineering

Page
8-24 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing

Illustration: Assume the following data for Lake

Holiday Marina, a boat and motor repair shop.
Illustration 8-11

Page
8-25 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing

Using time-and-material pricing involves three steps:

1) calculate the per hour labor charge,

2) calculate the charge for obtaining and holding

materials, and

3) calculate the charges for a particular job.

Page
8-26 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing
Step 1: Calculate the labor charge
 Express as a rate per hour of labor.

 Rate includes:
 Direct labor cost (includes fringe benefits).
 Selling, administrative, and similar overhead costs.
 Allowance for desired profit (ROI) per hour.

 Labor rate for Lake Holiday Marina for 2011 based on:

 5,000 hours of repair time.

 Desired profit margin of $8 per hour.

Page
8-27 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing
Step 1: Calculate the labor charge
Illustration 8-12

Multiply the rate of $38.20 by the number of labor hours used

on any particular job to determine the labor charges for the
job.
Page
8-28 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing
Step 2: Calculate the material loading charge
 Material loading charge added to invoice price of
materials.

 Covers the costs of purchasing, receiving, handling,

storing + desired profit margin on materials.

 Expressed as a percentage of estimated costs of parts

and materials for the year:
Estimated purchasing,
receiving, handling, Desired
storing costs + prof
Estimated costs of it
parts/materials mar
Page gin
8-29 SO 3 Use time-and-material pricing to determine the cost of services
on
 Time-and-Material
Time-and-Material Pricing
Pricing
Step 2: Calculate the material loading charge
The marina estimates that the total invoice cost of parts and
materials used in 2011 will be $120,000. The marina desires a
20% profit margin on the invoice cost of parts and materials.
Illustration 8-13

Page
8-30 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing
Step 3: Calculate charges for a particular job

Labor charges
+
Material charges
+
Material loading charge

Page
8-31 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing
Step 3: Calculate charges for a particular job
Lake Holiday Marina prepares a price quotation to estimate
the cost to refurbish a used 28-foot pontoon boat. Lake
Holiday Marina estimates the job will require 50 hours of labor
and $3,600 in parts and materials.
Illustration 8-14

Page
8-32 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing
Presented below are data for Harmon
Electrical Repair Shop for next year. The desired profit
margin per labor hour is $10. The material loading charge is
40% of invoice cost. Harmon estimates that 8,000 labor
hours will be worked next year. Compute the rate charged
per hour of labor.

Solution
on notes
Page page
8-33 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing
If Harmon repairs a TV that takes 4 hours to
repair and uses parts of $50, compute the
bill for this job.

Solution
on notes
Page page
8-34 SO 3 Use time-and-material pricing to determine the cost of services
 Time-and-Material
Time-and-Material Pricing
Pricing
Review Question
Crescent Electrical Repair has decided to price its work on a time-and-
material basis. It estimates the following costs for the year related to
labor.
Technician wages and benefits $100,000
Office employee’s salary/benefits $40,000
Other overhead $80,000
Crescent desires a profit margin of $10 per labor hour and budgets 5,000
hours of repair time for the year. The office employee’s salary, benefits,
and other overhead costs should be divided evenly between time
charges and material loading charges. Crescent labor charge per hour
would be:

a.
a. $42
$42 b. b.$34$34 c. $32
c. $32d. $30
d. $30 Solution
on notes
Page page
8-35 SO 3 Use time-and-material pricing to determine the cost of services
 Internal
Internal Sales
Sales

Vertically integrated companies – grow in either

direction of its suppliers or its customers.

Frequently transfer goods to other divisions as well

as outside customers.
Illustration 8-15

How do you price

goods “sold” with
in the company?

Page
8-36 SO 3 Use time-and-material pricing to determine the cost of services
 Internal
Internal Sales
Sales

Transfer price - price used to record the transfer

between two divisions of a company.

Ways to determine a transfer price:

1. Negotiated transfer prices.

2. Cost-based transfer prices.

3. Market-based transfer prices.

Conceptually - a negotiated transfer price is best.

Due to practical considerations, companies often

use the other two methods.

Page
8-37 SO 3 Use time-and-material pricing to determine the cost of services
 Negotiated
Negotiated Transfer
Transfer Prices
Prices

Illustration: Alberta Company sells hiking boots as well

as soles for work & hiking boots.
Two Divisions:
 Sole Division - sells soles externally.
 Boot Division - makes leather uppers for hiking
boots which are attached to purchased soles.

Each Division Manager compensated on division

profitability.
Management now wants Sole Division to provide at
least some soles to the Boot Division.

Page SO 4 Determine a transfer price using the

8-38 negotiated, cost-based, and market-based
 Negotiated
Negotiated Transfer
Transfer Prices
Prices

Computation of the contribution margin per unit for

each division when the Boot Division purchases
soles from an outside supplier.
Illustration 8-16

“What would be a fair transfer price if the Sole Division

sold 10,000 soles to the Boot Division?”
Page SO 4 Determine a transfer price using the
8-39 negotiated, cost-based, and market-based
 Negotiated
Negotiated Transfer
Transfer Prices
Prices

No Excess Capacity
If Sole sells to Boot,
 payment must at least cover variable cost per
unit plus
 its lost contribution margin per sole (opportunity
cost).

The minimum transfer price acceptable to Sole is:

Illustration 8-17

Page SO 4 Determine a transfer price using the

8-40 negotiated, cost-based, and market-based
 Negotiated
Negotiated Transfer
Transfer Prices
Prices

Maximum Boot Division will pay is

what the sole would cost from an
outside buyer: $17
Illustration 8-18

Page SO 4 Determine a transfer price using the

8-41 negotiated, cost-based, and market-based
 Negotiated
Negotiated Transfer
Transfer Prices
Prices

No Excess Capacity
Can produce 80,000 soles, but can sell only
70,000.
Available capacity of 10,000 soles.
Contribution margin of $7 per unit is not lost.
The minimum transfer price acceptable to Sole:
Illustration 8-19

Page SO 4 Determine a transfer price using the

8-42 negotiated, cost-based, and market-based
 Negotiated
Negotiated Transfer
Transfer Prices
Prices

Negotiate a transfer price between $11

(minimum acceptable to Sole) and $17
(maximum acceptable to Boot)
Illustration 8-20

Page SO 4 Determine a transfer price using the

8-43 negotiated, cost-based, and market-based
 Negotiated
Negotiated Transfer
Transfer Prices
Prices

Variable Costs

In the minimum transfer price formula,

variable cost is the variable cost of units
sold internally.

May differ - higher or lower - for units sold

internally versus those sold externally.

The minimum transfer pricing formula can still

be used – just use the internal variable costs.

Page SO 4 Determine a transfer price using the

8-44 negotiated, cost-based, and market-based
 Negotiated
Negotiated Transfer
Transfer Prices
Prices

Summary of Negotiated Transfer

Pricing
Transfer prices established:
 Minimum by selling division.
 Maximum by the purchasing division.

Often not used because:

 Market price information sometimes not easily
obtainable.
 Lack of trust between the two divisions.
 Different pricing strategies between divisions.

Page SO 4 Determine a transfer price using the

8-45 negotiated, cost-based, and market-based
 Negotiated
Negotiated Transfer
Transfer Prices
Prices
The clock division of Control Central
Corporation manufactures clocks and then sells them to
customers for $10 per unit. Its variable cost is $4 per unit,
and its fixed cost per unit is $2.50. Management would like
the clock division to transfer 8,000 of these clocks to
another division within the company at a price of $5. The
clock division could avoid $0.50 per clock of variable
packaging costs by selling internally. (a) Determine the
minimum transfer price, assuming the clock division
is not operating at full capacity.
Opportunity cost + Variable cost = Minimum transfer
price
$0 $3.50 $3.50
Page Solution SO 4 Determine a transfer price using the
8-46 on notes negotiated, cost-based, and market-based
page
 Negotiated
Negotiated Transfer
Transfer Prices
Prices
The clock division of Control Central
Corporation manufactures clocks and then sells them to
customers for $10 per unit. Its variable cost is $4 per unit,
and its fixed cost per unit is $2.50. Management would like
the clock division to transfer 8,000 of these clocks to
another division within the company at a price of $5. The
clock division could avoid $0.50 per clock of variable
packaging costs by selling internally. (b) Determine the
minimum transfer price, assuming the clock division
is operating at full capacity.
Opportunity cost + Variable cost = Minimum transfer
price
$6 $3.50 $9.50
Page Solution SO 4 Determine a transfer price using the
8-47 on notes negotiated, cost-based, and market-based
page
 Cost-Based
Cost-Based Transfer
Transfer Prices
Prices

Uses costs incurred by the division producing the

goods as its foundation.

May be based on variable costs alone or on

variable costs plus fixed costs.

Selling division may also add markup.

Can result in improper transfer prices causing:

 Loss of profitability for company.
 Unfair evaluation of division performance.

Page SO 4 Determine a transfer price using the

8-48 negotiated, cost-based, and market-based
 Cost-Based
Cost-Based Transfer
Transfer Prices
Prices
Illustration: Alberta Company requires the division to
use a transfer price based on the variable cost of the
sole. With no excess capacity, the contribution margins
per unit for the two divisions are:
Cost-based transfer price—10,000 units Illustration 8-22

Page SO 4 Determine a transfer price using the

8-49 negotiated, cost-based, and market-based
 Cost-Based
Cost-Based Transfer
Transfer Prices
Prices

Cost-based pricing is bad deal for Sole Division –

no profit on transfer of 10,000 soles to Boot
Division and loses profit of $70,000 on external
sales.

Boot Division is very happy; increases

contribution margin by $6 per sole.

If Sole Division has excess capacity, the division

reports a zero profit on these 10,000 units and
the Boot Division gains $6 per unit.

Page SO 4 Determine a transfer price using the

8-50 negotiated, cost-based, and market-based
 Cost-Based
Cost-Based Transfer
Transfer Prices
Prices

Overall, the Company is worse off by $60,000.

Illustration 8-23

Does not reflect the division’s true profitability

nor provide adequate incentive for the division
to control costs.
Page SO 4 Determine a transfer price using the
8-51 negotiated, cost-based, and market-based
 Market-Based
Market-Based Transfer
Transfer Prices
Prices

Based on existing market prices of competing goods.

Often considered best approach because it is

objective and generally provides the proper
economic incentives.

It is indifferent between selling internally and

externally if can charge/pay market price.

Can lead to bad decisions if have excess capacity

Why? No opportunity cost

Where there is not a well-defined market price,

companies use cost-based systems.
Page SO 4 Determine a transfer price using the
8-52 negotiated, cost-based, and market-based
 Market-Based
Market-Based Transfer
Transfer Prices
Prices

Review Question
The Plastics Division of Weston Company manufactures
plastic molds and then sells them for $70 per unit. Its
variable cost is $30 per unit, and its fixed cost per unit
is $10. Management would like the Plastics Division to
transfer 10,000 of these molds to another division
within the company at a price of $40. The Plastics
Division is operating at full capacity. What is the
minimum transfer price that the Plastics Division
should accept?
a. $10 c. $40
Solution
b. $30 d. $70 on notes
page
Page SO 4 Determine a transfer price using the
8-53 negotiated, cost-based, and market-based
 Effect
Effect of
of Outsourcing
Outsourcing on
on Transfer
Transfer
Pricing
Pricing
Contracting with an external party to provide a
good or service, rather than doing the work
internally.

Companies that outsource all of their production:

Virtual Companies

Use incremental analysis to determine if

outsourcing is profitable
As companies increasingly rely on outsourcing,
fewer components are transferred
internally thereby reducing the need for
Page transfer
SO 4 pricing.
Determine a transfer price using the
8-54 negotiated, cost-based, and market-based
 Transfers
Transfers Between
Between Divisions
Divisions In
In
Different
Different Countries
Countries

Going global increases transfers between

divisions located in different countries.

60% of trade between countries is estimated to

be transfers between divisions.

Different tax rates make determining

appropriate transfer price more difficult.

Page SO 5 Explain issues involved in transferring goods

8-55 between
 Transfers
Transfers Between
Between Divisions
Divisions -- Different
Different
Countries
Countries
Illustration: Alberta’s Boot Division is located in a
country with a corporate tax rate of 10%, and the Sole
Division is located in a country with a tax rate of 30%. The
following illustrates the after-tax contribution margin
per unit under alternative transfer prices $18 and $11.
Illustration 8-24

Page
8-56 SO 5
 Transfers
Transfers Between
Between Divisions
Divisions -- Different
Different
Countries
Countries
Illustration 8-24

Why do the after-tax contribution margins differ?

More of the contribution margin is attributed to the
division in the country with the lower tax rate.
Page
8-57 Solution on notes page SO 5
 Other Cost
Approaches to
Pricing
Absorption-Cost
Pricing
Consistent with GAAP: includes both variable and
fixed manufacturing costs as product costs
Both variable and fixed selling and administrative
costs are excluded from product cost base
Steps in approach:
1. Compute the unit manufacturing cost.
2. Compute the markup percentage – must cover
the desired ROI as well as
selling/administrative expenses.
3. Set the target selling price
Page
8-58 SO 6 Determine prices using absorption-cost pricing and variable-
 Absorption-Cost Pricing - Illustration
Step 1: Compute the unit manufacturing cost.
Illustration 8A-1

Additional information: Illustration 8A-2

Page
8-59 SO 6 Determine prices using absorption-cost pricing and variable-
 Absorption-Cost Pricing - Illustration
Step 2: Compute the markup percentage.
Illustration 8A-3

Solution
on notes
Page page
8-60 SO 6 Determine prices using absorption-cost pricing and variable-
 Absorption-Cost Pricing - Illustration
Step 3: Set the target selling price.
Illustration 8A-4

Because of fixed costs, if more than 10,000 units

are sold, the ROI will be greater than 20% and vice
versa.

Page
8-61 SO 6 Determine prices using absorption-cost pricing and variable-
 Proof of 20% ROI—absorption-cost pricing
Illustration 8A-5

Page
8-62 SO 6 Determine prices using absorption-cost pricing and variable-
 Summary: Absorption-Cost Pricing

Most companies that use cost-plus pricing use either

absorption cost or full cost as the basis.

Reasons:

1. Information readily available – cost effective.

2. Use of only variable costs may result in too low a

price – suicidal price cutting.

3. Most defensible base for justifying prices

Page
8-63 SO 6 Determine prices using absorption-cost pricing and variable-
 Variable-Cost Pricing
Cost base consists of all variable costs associated
with a product – manufacturing, selling,
administrative.

Since fixed costs are not included in base, markup

must provide for fixed costs (manufacturing,
selling, administrative) and the target ROI.

Useful for making short-run decisions because

variable and fixed cost behaviors are considered
separately.
Page
8-64 SO 6 Determine prices using absorption-cost pricing and variable-
 Variable-Cost Pricing

Steps:

1. Compute the unit variable cost.

2. Compute markup percentage.

3. Set target selling price.

Page
8-65 SO 6 Determine prices using absorption-cost pricing and variable-
 Variable-Cost Pricing - Illustration
Step 1: Compute the unit variable cost.
Illustration 8A-6

Page
8-66 SO 6 Determine prices using absorption-cost pricing and variable-
 Variable-Cost Pricing - Illustration
Step 2: Compute the markup percentage.

Illustration 8A-7

Solution
on notes
Page page
8-67 SO 6 Determine prices using absorption-cost pricing and variable-
 Variable-Cost Pricing - Illustration
Step 3: Set the target selling price.
Illustration 8A-8

Using the $132 target price produces the desired

20% ROI at a volume level of 10,000 units.

Page
8-68 SO 6 Determine prices using absorption-cost pricing and variable-
 Proof of 20% ROI—contribution approach
Illustration 8A-9

Page
8-69 SO 6 Determine prices using absorption-cost pricing and variable-
 Summary: Variable-Cost Pricing

Avoids blurring effects of cost behavior on

operating income.

Reasons:
1. More consistent with CVP analysis.

2. Provides data for pricing special orders by showing

incremental cost of accepting one more order.

3. Avoids arbitrary allocation of common fixed costs

to individual product lines.

Page
8-70 SO 6 Determine prices using absorption-cost pricing and variable-
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Page
8-71