Generate price from item selected in drop down
You can do this using the Rules module: http://drupal.org/project/rules/.  That should already be up and running if you're using Drupal Commerce.

So just go to admin/config/workflow/rules and add a new rule that looks something like this:


Event: Calculating the sell price of a product
Condition: Entity has field: [commerce-line-item], Field: 
Action: Set the unit price to a specific amount; Parameter: [commerce_line_item]; Value:  can either select another field to base this on or do a hard-coded value; Leave Price component type and Price rounding mode to their defaults
Test!


Let me know if this ends up working for you