The initial contract will establish targets for cost and fee, as well as a minimum and maximum fee and a formula for adjustment. Once the contract is completed, the contractor will be paid based on this formula. In essence, the fee will increase if the seller completes the contract at less than the target cost, and it will decrease if the contract exceeds the target cost. (Dacuan, 2010). In this type of contract, the seller will be reimbursed for all costs plus and incentive fee based upon achieving certain performance objectives mentioned in the contract.
When taxes such as excise taxes and indirect taxes such as VAT are placed by the government, the government takes into account the price elasticity of demand of a product and the response of the consumer if price were to rise. The tax burden depends on the price elasticity of demand to establish of whom is to take majority of the burden. When price elasticity of demand is inelastic, the consumer will take majority of the tax burden. Tax incidence falls on the group that responds the least to price and has the most inelastic curve. The tax burden can possibly be split evenly between producer and consumer, by the decision of the producer.
These determinants are the resource prices, technology, taxes and subsidies, producer expectations, and number of sellers. An equilibrium price is required to produce an equilibrium quantity and a price below that amount is referred as quantity supplied of zero no firms that are entering that particular business. If the coefficient of price is greater than zero, as the price of the output goes up, firms wants to produce more of that output. As the price of the output goes up it becomes more appealing for the firms to shift resources into the production of that output. Therefore, the slope of a supply curve is the change in price divided by the change in quantity.
Basically market research can be identified into four main class of study. First is investment studies, this study is carry out to find out how the market will react to a new plant investment, research, or promotion. Companies want to know whether their new move is being welcome by the public before they implement it. The second is marketing studies, marketing studies focus mainly on market structure. This class of studies is carry out to find out sales opportunities for existing manufacturers.
A company’s profit is affected by the amount of revenue it generates and the costs associated with production. When a company is deciding how much to produce, there are both short-run and long-run production periods. A short run is the current time span during which at least one fixed input must be paid whether or not any output is produced. A long run is a time period far enough into the future that all fixed inputs can be variable. Planning for the future involves looking at all possible situations which will maximize profit and minimize cost.
Taking a look into both we can see the pro and cons on both ends. Net present Value (NPV) is the analysis and an evaluation of a forecasted outcome to determine whether a certain investment is positive or negative to a firm. It presents the company with the ability to avoid risk and insure that a certain investment is aligned with cash flow and project deliver. NPV reflects the income and it will determine what return if any holds value to the firm interms of present value. As stated by Akers (2014) “The NVP calculation reveals the dollar amount that the project will produce.
The Industrial Pricing Process The decision for pricing an industrial product is a multidimensional ongoing process. Pricing objects have to be consistent with the marketing and corporate objects i.e. a certain market-roi, market -share goals or beating competition. Pricing objects must be established carefully because of their far reaching effect. Two main strategies for pricing are Du Pont’s skimming strategy which emphasizes specialty products that carry a high margin and Dow’s penetration strategy focuses first on pricing low margin commodity goods low to build a dominant market share and then on maintaining that dominant share.
These estimates are for anticipated contract costs and revenues earned during the life of the contract. These amounts affect the reported amounts of assets and liabilities on the company’s financial statements. Actual results could differ from these numbers. Revenues are recognized on commercial sales when products are shipped or when services are performed. Revenue on production contracts are recorded when specific contract terms are fulfilled.
Variable costs- these are costs that change depending on amount of use and output of sales and the capacity of production e.g. Electricity, parts and materials. The fixed costs and the variable costs amount to the total costs. 3. Selling price- The price at which they are going to sell their product or service.
The form of business we choose to establish new business also affects the amount of profit gain, owners liability and kind of tax we have to pay. According to Steve Jobs, article of urban outfitters article the business start up with the three persons as partnership change to sole proprietorship due to personal case. This will affects the business financial capacity and personal liability sta... ... middle of paper ... ...ather over coffee, and they were one of the first retailers to offer internet access. Another niche player would be Best Buy. Although this store is of a large scale, it has a focus on providing entertainment and computer products and their employees can answer questions about the products.