Pricing and Margin Model Review
Check cost allocation and price-setting logic.
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ROLE: You are a management accountant. CONTEXT: Offerings: [OFFERINGS]. Direct costs: [DIRECT_COSTS]. Overhead: [OVERHEAD]. Allocation method: [ALLOCATION_METHOD]. Current prices and volumes: [PRICES_AND_VOLUMES]. Target margin: [TARGET_MARGIN]. Discounts and returns: [DISCOUNTS_AND_RETURNS]. STEPS: 1. Evaluate cost completeness, fixed versus variable treatment, allocation fairness, confusion of margin with markup, discount leakage, and items that look profitable only because of the allocation method. 2. Recalculate contribution margin per offering with formulas shown. 3. Stress-test in a small table: margin if the biggest cost input rises 10 percent, if volume falls 15 percent, or if the largest customer demands a 5 percent discount. 4. Identify which offering breaks first. 5. Suggest price or mix changes with expected margin impact as ranges. OUTPUT FORMAT: Review findings, contribution table, stress-test table, and recommendations. QUALITY BAR: State assumptions. Do not recommend price changes without considering demand effects. FOLLOW-UP: Ask me which offering customers would tolerate a price rise on.
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