Numbers that measure the percentage of price changes over time

Price index numbers

Calculates price changes for a single item over time

Simple Price Index (eggs)

Calculates price changes for a group of related items over time

Aggregate Price Index (poultry) - most are classified by region

Calculated by adding all the numbers together and dividing by the number of values

Mean

Middle value of number listed in numerical order

Median

Value that occurs the most frequently

Mode

Which data shape has the same median and mode?

Normal

Which data shape has a "tail" pointing to the right (positive) or left (negative)?

Skewed - a small number of extremely positive or negative values pulling the mean to the right or left of the median

Data shape that has two or more peaks

Bi- or Multi-modal

Maximum value - min value

Range

A Variable that drives price

Independent Variable

The variable you are evaluating

Dependent Variable

The quantity at which total revenue equals total cost

Break Even point

costs remain constant, even as activity level changes

Fixed Cost

Cost go up or down based on activity

Variable Cost

includes a fixed and variable element

Semi-Variable Cost

Pricing when unit price is under variable cost

Irrational Pricing Strategy

NI/OI*OP=NP

Calculate a new price using an indices

payments based on percentage or stage of completion are authorized

Performance Based Payment

contract financing arrangement that deviates from FAR Part 32 is considered unusual contract financing

Unusual Contract financing (Advance Payment)

payments made on any of the following bases:

– Performance measured by objective

– Accomplishing defined events

– Other quantifiable measures of results

– defined payment amounts

Performance Based Payments

Types of Financing

Progress Payments

Performance Based Payments

Unusual Contract Financing

Max advance payment?

15%

C=F+Vu(Q)

Cost Volume

Preferred Method of Government Financing

Performance payment

Vu-(C2-C1)/(Q2-Q1)

Variable Cost

F+Vu(Q)+Profit

Revenue (Ru(Q))

Ru(Q)-F-Vu(Q)=

Profit

When VU(Q) is greater the Ru(Q) is this a rational pricing strategy?

No, this is irrational

F/(Ru(Q)-Vu(Q)

Break Even point

(Ru-Vu)(Q)

Contribution income per unit