Apply the principles of costing and pricing to a business venture

ID: 263455
NQF Level: Level 4
Credits: 6

PURPOSE OF THE UNIT STANDARD
This Unit Standard is for learners who are required to applying the principles of costing and pricing in determining profit margins for a new venture. The Unit Standard will assist the learner in determining the future profitability by establishing whether the costs involved will generate sufficient profit to justify the launching of the new venture.

Learners credited with this unit standard will be able to:

• Explain the criteria of a price setting policy for a new venture.
• Analyse internal and external factors that impact upon pricing decisions.
• Demonstrate an understanding of the relationship between costs, revenue and profits.

LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING
It is assumed that the learner has the following knowledge and skills:

• Mathematical Literacy at NQF Level 3.

UNIT STANDARD RANGE
N/A

Specific Outcomes and Assessment Criteria:

SPECIFIC OUTCOME 1
Explain the criteria of a price setting policy for a new venture.

ASSESSMENT CRITERIA

ASSESSMENT CRITERION 1
The flow of the trading cycle is explained and illustrated for a new venture.

ASSESSMENT CRITERION 2
The concepts costing and pricing are differentiated in terms of a product or service.

ASSESSMENT CRITERION 3
The difference between fixed costs, variable costs and total costs are explained in the context of own venture.

SPECIFIC OUTCOME 2
Analyse internal and external factors that impact upon pricing decisions.

ASSESSMENT CRITERIA

ASSESSMENT CRITERION 1
The internal factors impacting upon pricing decisions are identified and discussed in relation to the profitability of own venture.

ASSESSMENT CRITERION 2
The external factors impacting upon pricing decisions are identified and discussed in relation to the profitability of own venture.

ASSESSMENT CRITERION 3
The business activity levels are recognised and specified in terms of their limitations.

ASSESSMENT CRITERION 4
Variations in pricing decisions are to be calculated in terms of the impact on the break-even point.

SPECIFIC OUTCOME 3
Demonstrate an understanding of the relationship between costs, revenue and profits.

ASSESSMENT CRITERIA

ASSESSMENT CRITERION 1
Available costing methods are reviewed in relation to own business.
ASSESSMENT CRITERION RANGE
Methods include but are not limited to absorptive costing and variable costing.

ASSESSMENT CRITERION 2
Profit mark-up is calculated and analysed for own business.

ASSESSMENT CRITERION 3
A distinction between types of profit is made in relation to own business venture.

ASSESSMENT CRITERION 4
Competitive pricing is investigated and compared to inform effective costing and forecasting of operating a business.

UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS

• An individual wishing to be assessed (including through RPL) against this Unit Standard may apply to an assessment agency, assessor or provider institution accredited by the relevant ETQA, or an ETQA that has a Memorandum of Understanding with the relevant ETQA.
• Anyone assessing a learner against this Unit Standard must be registered as an assessor with the relevant ETQA or with an ETQA that has a Memorandum of Understanding with the relevant ETQA.
• Any institution offering learning that will enable achievement of this Unit Standard or assessing this Unit Standard must be accredited as a provider with the relevant ETQA or with an ETQA that has a Memorandum of Understanding with the relevant ETQA.
• Moderation of assessment will be conducted by the relevant ETQA at its discretion.

UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE

• Trading cycle.
• Definitions of capital, costs, revenue, pricing, and profits.
• Determination of break-even point.
• Costing and pricing methods.
• Direct and indirect costs.
• Application of commonly-used information gathering techniques.
• Application of financial concepts.
• Appropriate use of financial analysis in making accurate decisions.
• Banking, banking application forms, bank statements and interest rates.

UNIT STANDARD DEVELOPMENTAL OUTCOME
N/A

UNIT STANDARD LINKAGES
N/A

Critical Cross-field Outcomes (CCFO):

UNIT STANDARD CCFO IDENTIFYING
Identifying and solving problems in which responses display that responsible decisions using critical and creative thinking have been made when:
Analysing internal and external factors that impact upon pricing decisions.

UNIT STANDARD CCFO ORGANISING
Organising and managing oneself and one’s activities responsibly and effectively when:
Analysing internal and external factors that impact upon pricing decisions.

UNIT STANDARD CCFO COLLECTING
Collecting, analysing, organising and critically evaluating information to better understand and explain:
The criteria of a price setting policy for a new venture.
The relationship between costs, revenue and profits.

UNIT STANDARD CCFO SCIENCE
Using science and technology effectively and critically, showing responsibility towards the environment and health of others when:
Analysing internal and external factors that impact upon pricing decisions.
Demonstrating an understanding of the relationship between costs, revenue and profits.

UNIT STANDARD CCFO DEMONSTRATING
Demonstrating an understanding of the world as a set of related systems by recognising that problem-solving contexts do not exist in isolation when:
Demonstrating an understanding of the relationship between costs, revenue and profits.

QUALIFICATIONS UTILISING THIS UNIT STANDARD:

	ID	QUALIFICATION TITLE	PRE-2009 NQF LEVEL	NQF LEVEL	STATUS	END DATE	QUALITY ASSURING BODY
Core	66249	Further Education and Training Certificate: New Venture Creation	Level 4	NQF Level 04	Reregistered	2015-06-30	SERVICES
Core	79886	National Certificate: Business Advising	Level 5	NQF Level 05	Reregistered	2015-06-30	SERVICES