A Case Study on the Use of Cost-Plus Pricing

Pricing Objectives involve specifying the role of price in an organization’s marketing and strategic plans. These

In business there are certain factors that have to be evaluated before a company can see if a profit has been made. To even get to the point where a profit will be made there has to be a product that is sold whether it is a tangible or an intangible product. There has to be something that the business is selling in order to make that profit. The amount of profit that is attained is the outcome of the total revenue minus the total cost. This will then show the business what the remaining profit is. Business is like a puzzle, all the pieces have to fit and work together to have the puzzle complete. In business things have to work together or it won’t work and all the hard work that was put in to making

Preparing different income statements captures information in diverse ways to facilitate decision making on internal matters. The management needs to understand cost behavior in order to control the costs. Besides the production costs, changing sales patterns affects profitability and there is a need to achieve better sales accuracy after understanding cost behavior. Variable costing also captures information about the impact of changing operation on profitability and the management is better placed to make pricing decisions to maximize

3. Suppose that if you buy one Big Mac that gives you marginal utility of 500 and a second

In order for a company to succeed and be successful, it is very important for the company to understand the difference between profit and cost of goods. There are costing tools that can help a business figure out what the cost of product is during the manufacturing process. These tools are beneficial for a company to figure out how much profit can be made. These tools take the cost of manufacturing the unit and subtract it from the sale price of the product. Having this information, the profit per unit, is very beneficial for a company to know which products they should produce more heavily, or which ones to eliminate. I want to discuss two costing methods that are beneficial to a

According to Don Hofstrand in his article has said that (The main objective of any business project is profitability without profits, the project will not last long. So it's important measured the previous profitability and current profitability as well as predict of future profitability this is done by measuring expenses and income. Income is the money produced by the business. An example is the manufacture of wooden chairs the resulting sale is considered income, but some of the money that may enter the business like borrowing some money is not considered an income of the company, it's like a cash transaction between the lender and the business for generate this money for operating the buying assets or business.

Warehouse, financing costs, insurance costs, obsolescence, pilferage and spoilage are the key components of carrying cost. In the case of business study, carrying costs can be recorded as non-capital expenditure on the scenario cash flow statement. In contrast, carrying cost costs or savings avoided could be recorded directly on the incremental cash flow statements as gains and benefits. All factors of production have costs associated with them: labor, capital and fixed assets, for instance. The cost of labor employed in the production of services and goods is in most cases measured in terms of salaries and wages. The cost of fixed assets employed in the production process is basically measured in terms of depreciations. The cost of capital employed to acquire fixed assets is normally measured in terms of interest expenses connected with raising the

for some services or in some markets they will be able to act as price setters; for other

The goal of traditional accounting practices is to achieve the lowest possible cost per unit by maximizing employee and equipment productivity. However, the goal of the plant’s

The use of opportunity cost in economics helps in displaying the different professionalism of a firm and an individual business person in the market world. An individual or business firm aims to maximize profits. Profit is the equivalence to the difference between revenue and cost: profit = total revenue – total cost. The total cost refers to the opportunity cost which is accrued while doing business.

Opportunity cost is a more comprehensive and important concept than accounting cost because it allows firms to calculate their implicit cost. This illustrates to firms the value of the lost alternative and also the opportunity cost of their output goods and services. For example, a new established vehicle manufacturing company produces 2 trucks monthly. Accounting cost determines the company is making a profit when calculating their total revenue minus explicit costs only. In addition, the company

In the complex world of business, obtaining success can often seem quite difficult. Problems arise, opinions differ, personalities clash, and often time’s solutions seem near impossible. The important idea to recognize in these situations, however, is that all businesses can be simplified to one main fundamental goal, making money. When thinking about making money, there are three important terms that must be understood. These terms are throughput, inventory, and operational expense. In the accounting world, throughput is revenue earned from selling a product or service, inventory is money spent on fixed assets which lead to throughput, and operating expenses are money spent to turn inventory into throughput. Each of these terms plays a

Cost volume profit (CVP) analysis and costing for the 21st century has evolved into a very complex and difficult paradigm. Even the most gifted accountants find that grasping the entire concept of accounting for a corporation can be very mind-boggling and difficult. Yet, understanding such a fundamental principle can allow corporations to grow in ways that other, less educated, corporations can never dream to achieve and simultaneously understand the ‘bottom-line’. In this paper we will discuss value costing in the 21st century, other relevant costing methods, and the relevancy of CVP in today’s workplace.

There are many different aspects that go into making a business successful. Businesses need a strong vision, great leaders within the organization, strong sales, a successful sales team, a steady stream of revenue as well as a way to produce the revenue or sales coming in. Two important aspects of business that are not always brought up, is profit and the cost to operate the organization. Often times managers only look at the net profit or net revenue on their Profit and Loss statements without breaking down the numbers or cost of doing business. Even if an organization is successful and has a great profit margin at the end of the month, quarter or year, does not mean they do not need to analyze the cost of the operations. Analyzing those costs cannot only help an organization become profitable, when they are unprofitable, but can make them more profitable even if they show a healthy profit. Finding ways to cut cost or become more efficient with the operations can lead an organization in the right direction when it comes to their finances (Ahmed, S., 2016).

Total profit and cash flow are expected to be produce by certain asset which is occa-sionally contrasted with book value. If the book value is more than cash flow of the asset, the remaining amount should be written off and the value should be rejected from the balance sheet (Dauangploy,O.,et. al.,2005). If the carrying amount is more than recoverable amount, it can indicate the loss of impairment. Then the recover-able amounts need to be written down. There are two different models to recognise impairment, cost model and revaluation model. Impairment loss in cost model can be recognised directly in profit or loss. In revaluation model asset is measured in its fair value and impairment loss is recognised as descending revaluation.