When I think about my career in the future, cost-plus pricing seems to be the most reliable method of determining product selling prices. It involves adding up the cost to produce a product including labor, materials and overhead and then adding on a profit margin. The company can cover its expenses and still make a profit. However, this approach allows for some flexibility when setting the price.
Employees must be ethical when creating a budget for a department. It can make a big difference in the accuracy and fairness to the company’s pricing decisions. Establishing clear expectations and guidelines is one way to guarantee ethical behavior. This includes preventing the use or conflict of interest of any information in budgeting decisions. A system of checks and balanceds such as multiple employees reviewing and approving budget proposals can be helpful in identifying and addressing any ethical problems.
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