BASE COST
The Base Cost is the unit cost that you have chosen when designing your project in the R&D decisions. The base cost is adjusted every year with inflation.
TRANSFER COSTS
The Transfer Cost is the price paid by Marketing to Production for each unit sold of a given brand/product.
The Current Unit Transfer Cost (CUC) is the cost of the latest units produced. It is calculated each year depending on the Base Cost of the R&D project on which the brand is based, and on the cumulative number of units produced since the brand was launched. The CUC is equal to the Base Cost when the cumulative production is equal to 100,000 units (2.5 million for the Consumer Goods version). The CUC will then decrease by 15% each time the cumulative production doubles: 200,000 units, 400,000 units, … (5,000,000, 7,500,000, …). Beware, the CUC will be higher than the base cost if the cumulative production is below 100,000 units (2.5 million).
The Average Unit Transfer Cost (AUC) is the average cost of all units sold in the period. Usually, the units in your inventory have a higher cost than the latest produced ones, because of the experience effect. In most cases, the AUC is equal to or slightly lower than the CUC.
Comments
0 comments
Article is closed for comments.