 | Term | Definition |
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Collusive Pricing |
Companies in an industry conspire in their pricing and production decisions to achieve a price above the competitive price and so restrain trade |
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Cost Incurrence |
Describes when a resource is consumed (or benefit foregone) to meet a specific objective |
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Customer Life-Cycle Costs |
Focuses on the total costs incurred by a customer to acquire, use, maintain, and dispose of a product or service |
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Designed-In Costs |
Another term for locked-in costs |
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Dumping |
Under U.S. laws, occurs when a non-U.S. company sells a product in the U.S. at a price set below the market value in the country where it is produced, and this lower price materially injures or threatens to materially injure an industry in the U.S. |
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Life-Cycle Budgeting |
Budget that estimates the revenues and business function costs of the value chain attributable to each product from initial R&D to final customer service and support |
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Life-Cycle Costing |
System that tracks and accumulates business function costs of the value chain attributable to each product from initial R&D to final customer service and support |
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Locked-In Costs |
Costs that have not yet been incurred but, based on decisions that have already been made, will be incurred in the future |
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Nonvalue-Added Cost |
A cost that, if eliminated, would not reduce the actual or perceived value or utility (usefulness) customers obtain from using the product or service |
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Peak-Load Pricing |
Practice of charging a higher price for the same product or service when the demand for it approaches the physical limit of the capacity to produce that product or service |
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Predatory Pricing |
Company deliberately prices below its costs in an effort to drive out competitors and restrict supply and then raise prices rather than enlarge demand |
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Price Discrimination |
Practice of charging different customers different prices for the same product or service |
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Product Life Cycle |
Spans the time from the initial R&D on a product to when customer service and support is no longer offered for that product |
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Target Cost Per Unit |
Estimated long-run cost per unit of a product or service that enables the company to achieve its target operating income per unit when selling at the target price; is derived by subtracting target operating income per unit from the target price |
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Target Operating Income Per Unit |
Operating income that a company aims to earn per unit of a product or service sold |
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Target Price |
Estimated price for a product or service that potential customers will pay |
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Target Rate of Return on Investment |
The target annual operating income that an organization aims to achieve divided by invested capital |
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Value-Added Cost |
A cost that, if eliminated, would reduce the actual or perceived value or utility (usefulness) customers obtain from using the product or service |
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Value Engineering |
Systematic evaluation of all aspects in the value chain, with the objective of reducing costs while improving quality and satisfying customer needs |
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