A cost-plus contract is an agreement where a supplier is reimbursed for all costs incurred in generating a product or service, plus a specified profit margin. This form of contract is commonly used in situations with unpredictable costs or projects requiring substantial research.
A method to establish the selling price of a product or service by estimating the total cost and adding a percentage mark-up to achieve a profitable price.
Cost-plus transfer prices are set by cost-plus pricing, which includes a mark-up to provide a profit for the supplying division. This method incorporates variable costs and fixed costs for the purpose of setting a transfer price that includes a profit margin.
The process of two or more participants attempting to reach conflicting objectives or goals. The process of bidding for contracts is a game. Logically, each participant would bid estimated costs plus some amount for profit. Since only one contract would be awarded, the outcome depends jointly on the actions of all bidders.
In accounting and finance, 'Margin' can refer to several different concepts ranging from profit margin in sales to the difference in buy/sell prices by market makers.
In Islamic finance, Murabaha refers to a sales contract where the seller discloses the cost and profit margin to the buyer.
Profit margin is a measure of profitability that calculates how much of every dollar earned by a company winds up as profit. It is critical for assessing the efficiency and performance of a company.
Profit margin measures the profitability of a single transaction or set of transactions by calculating the excess of sales revenue over the costs incurred in providing the goods or services sold. It is also a measure of the surplus of net assets over a period, taking into account capital injections or withdrawals by proprietors.
An expression that indicates increasing difficulty in maintaining the same amount or rate of profit due to reduced sales, lower prices, rising production costs, financing costs, administrative expenses, or taxes.
Sales Margin Quantity Variance is an important concept within standard costing that measures the difference between the budgeted sales quantity and the actual sales quantity, valued at the standard profit margin per product.
Sales Margin Volume Variance, often referred to as Sales Volume Variance, in standard costing, measures the adverse or favorable variance arising from the difference between the actual number of units sold and those budgeted, valued at the standard profit margin.
A strategic method for pricing products or services based on the price customers are willing to pay, ensuring both market competitiveness and profitability.
Value Added refers to the value of a product or output minus the costs of raw materials used in production. Essentially, it represents the increase in value created by the manufacturing process through the application of capital and labor.
