ACTIVITY 6 MA610 Managerial Accounting Lesson 6: Managerial Decision Making Activity 6: Pricing & Costing (100 points) Part A For this activity, you need to complete Problems 5-56 (pp. 218) and 5-57 (pp. 218). First, however, you need to perform the following before completing the problems. (40 points) (A 1 page answer is required.) As a prerequisite to the use of financial information as a basis for managerial decision-making, you must be familiar with the notion of relevance. Relevant information is the predicted future costs and revenues that will differ among the alternatives. For example, sunk costs are always irrelevant; opportunity costs are always relevant. You will examine several decision contexts for the use of financial information within an organization. A decision model is beneficial as a frame of reference. Exhibit 5-1 (p. 184) looks at the decision process and the role of information. Another important topic is pricing. Read about the concept of pricing, general influences on pricing in practice, and the role of costs in pricing decisions. The traditional bases for pricing have included cost and cost-plus methodologies. The base for cost-plus pricing can be variable cost, fixed cost, total manufacturing cost, or full cost. See Exhibit 5-8 (p. 199) for an illustration of these cost-plus bases for pricing. The target costing process is diagrammed in Exhibit 5-11 (p. 204). The ITT Automotive case provides a step-by-step example of the target costing methodology. See the "Summary Problem for Your Review" (Custom Graphics, p. 207) and the "Business First" inset (p. 206) for more examples of the use of relevant financial information for making marketing decisions. Part B Complete text Problems 5-59 (pp. 219), 6-32 (pp. 252), and 6-56 (p. 261). Show all computations. (A 2-page response is required.) Grading Rubric Please refer to the rubric on the following page ror the grading criteria for this assignment