Re: Cause and Effect Reversed?

[booth@xxxxxxxxxxxx]

The business school example for this costing process was the DC-3 
airplane.  Original research & development costs were huge (for that time) 
and were divided out over an estimated life-time run of, I believe, 1000 
planes.   After the first 1000 planes they didn't stop making them and 
they didn't lower the selling price.  The portion directed to recovering 
research and development, 100% of it, fell straight through to the bottom 
line.  I believe the final production run was in the hundreds of thousands 
of units making it the most successful plane ever built, at least up to 
the Boeing 700 series.
_______________________
Booth Martin
Booth@MartinVT.com
http://www.MartinVT.com
_______________________




Pete Hall <pbhall@execpc.com>
Sent by: owner-midrange-l@midrange.com
09/29/2000 08:17 PM
Please respond to MIDRANGE-L

 
        To:     MIDRANGE-L@midrange.com
        cc: 
        Subject:        Re: Cause and Effect Reversed?

At 21:04 09/28/2000, Leif Svalgaard wrote:
>so when you have sold the number of units that maximizes your profit, 
i.e.
>when your production run is exhausted, you stop selling your product,
>even if you have customers begging for more.
>
>get real.

If you still have customers begging for more, it means you've not found 
the 
correct pricing function. Your price is too low.
Pete Hall
pbhall@execpc.com
http://www.execpc.com/~pbhall/

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