Introduction
This resource introduces learners to some of the most common methods for costing and pricing products or services.
Learners explore direct/indirect and variable/fixed costs, and use the Product costing and pricing online interactive tool to model how changes in production and external costs alter the direct, marginal, and absorption cost of a unit of production. They are introduced to the basics of activity-based costing before considering advantages and disadvantages of cost-plus, value, and feature pricing in engineering.
What's in this resource?
This resource consists of:
- An overview video which can be watched on its own or shown in part to the class to support the lessons. Use the chapters to navigate along the video.
- A student resource which contains key information related to the subject, diagrams, questions and a case study.
- A teacher guide with advise about how to deliver the subjects and suggestions for classroom activities.
- An interactive tool you can use to test understanding.
Suggested learning outcomes
Learners will be able to:
- name the four types of engineering and business cost, and describe how they add to the cost of a product unit
- explain how to calculate marginal and absorption costings, and when to use each method
- name some applications, advantages, and disadvantages of pricing models.
Topics covered
- Enterprise.
- Financial concepts.
- Direct, indirect, variable, and fixed costs.
- Direct (prime), marginal, and absorption costing.
- Activity-based costing.
- Cost-plus, value, and feature pricing models/strategies.