COST ACCOUNTING INFORMATION AND PRICE DETERMINATION
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
COST ACCOUNTING INFORMATION AND PRICE DETERMINATION
ABSTRACT
Cost accounting became necessary as industrialization increased, resulting in an increase in manufacturing. As a result, it is evident that an efficient costing system is critical for industrial control. The topic “Cost Accounting Information and Price Determination” teaches about cost accounting and its applications to organisational management in planning and decision making.
And here, we are attempting to apply cost information that has been determined efficiently to pricing policy decisions. There is no agreed-upon ideal technique of costing products,
although it may be useful to recognize that cost allocation is used to get a mutually acceptable price and is not required to depict the cause and effect relationship of cost incurrence. However, price determination from cost in an effective cost system will most likely approach the price of the product to its value.
INTRODUCTION TO CHAPTER ONE
Background of The Study
There are no more significant market decisions than those about pricing.
According to “Fred Foy” (1980:P143), no matter how intelligently the product, distribution, and communication mixes are planned, inappropriate pricing of a production is one of the reasons because price decisions cut across all aspects of corporate operation.
This study aims to emphasise, among other things, management’s seeming indifference to these critical issues. The cost structure, particularly as it affects the manufacturing industry, is a fundamental factor of the price product of enterprises, which varies depending on conditions, types of commodities services offered.
Before going into some of the other elements that influence product pricing, consider some of the factors at work in the cost and of beer, which are also components of the cost structure:
a.Historical Accounts: Because actual cost and revenue numbers gathered from prior periods in a stable economic activity affect management, it can utilise this information to decide the pricing of a product.
b.Budgeted Costs: Management frequently bases its policy on an information system that allows costs to be estimated, which is typically used in newly founded organisations.
c.Market Forces: Demand and Supply; the price of beer is affected by market forces because it cannot be rigid in its pricing because it is a price taker, thus when demand is high, the price of beer rises, and vice versa.
d.Factor Capacity: This refers to the amount of product that can be produced in a single run. The factory with a large size will produce and sell it at a lower price than a factory with a small size.
Life Breweries, for example, has a capacity of approximately 500 hectoliters of a 6 million cartoons every year, but Premier has a capacity of 1200 hectoliters. Premier should be less expensive under typical circumstances.
e.Raw Materials: Beer brewing necessitates the use of three key raw materials: malt, maize, and hop (malt extract). Malt is the most expensive component of beer, because both malt and hops are imported.
When the price of all those materials rises, so does the price of beer, and vice versa. For example, when malt cost N20,000.00 per tone, a carton of beer sold for N600.00, but now it is N35,000.00 and I sell for N1000.00 each carton. Another influence is efficiency, as well as economic developments.
Statement of the Problem
The study aims to solve the difficulty that management faces when pricing and promoting their products owing to insufficient or deceptive accounting information. There have been instances where management has unintentionally continued to sell products at a loss.
This researcher seeks to present various scenarios and simulations, and by properly analysing these, management will have learned the best approach of analysing its costs in order to gain enough information for pricing strategy.
The Goal of the Research
The initiative will make an attempt to:
a. Examine the cost aspect involved in beer brewing and the extent to which the cost of beer is influenced by the actual cost of production.
b. Through the ideal of the real cost figures involved in the price of beer, other aspects involved in the price of beer will be known.
b. Determine an adequate setting and atmosphere for proper cost collecting and analysis.
The Importance of the Research
The essence of cost accounting information came to mind when one realised that no corporation can thrive in the present world of industrialization without accurately priced its products.
And any company that does not have accurate cost information risks pricing itself out of the market. Proper costing is the most powerful weapon a company can deploy against its competitors to maximise efficiency.
Even if a price ceiling exists, the firm will still be able to maximise its earnings; that is, cost reduction without a corresponding price decrease leads to increased profit.
The more costs are reduced based on information obtained, the higher the profit, and this is a position increase in government tax, which discourages the use of the “market watch department” as a pricing guide to some manufacturing industries, particularly the beer industry, from which the case study is not exempt.
Need help with a related project topic or New topic? Send Us Your Topic