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Pricing and Indirect Cost Allocation — A Note

Pricing and Indirect Cost Allocation — A Note Abstract: Companies that use cost‐based pricing usually allocate indirect costs to their products. An inherent problem with this is that, while product prices are a function of the total cost, indirect cost allocation methods based on revenues depend on the product prices. This paper shows how to simultaneously determine unique product prices (with unequal markup rates) and cost allocations using the relative revenue method. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting & Finance Wiley

Pricing and Indirect Cost Allocation — A Note

Schneider, Arnold
Accounting & Finance , Volume 27 (1) – May 1, 1987
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References (2)

Publisher
Wiley
Copyright
© 1987 Accounting and Finance Association of Australia and New Zealand
ISSN
0810-5391
eISSN
1467-629X
DOI
10.1111/j.1467-629X.1987.tb00235.x
Publisher site
See Article on Publisher Site

Abstract

Abstract: Companies that use cost‐based pricing usually allocate indirect costs to their products. An inherent problem with this is that, while product prices are a function of the total cost, indirect cost allocation methods based on revenues depend on the product prices. This paper shows how to simultaneously determine unique product prices (with unequal markup rates) and cost allocations using the relative revenue method.

Journal

Accounting & Finance – Wiley

Published: May 1, 1987

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