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Does a company's costing method have any effect on its pricing decisions?
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∙ 11y ago
u from ntu doing bu8101 seminar 9?
Wiki User
∙ 11y ago
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How is marginal and differential costing used as a tool for decision making?
The Marginal or differential accounting has the basic rule that this accounting method donot consider decisions made previously and only considers the decisions effecting the future so only that information is used for future decision making which is going to effect or change the future decisions and don't considers the decisions made before. So past information is not relevent for future decision making and this is also the main rule which is used by this accounting method if we use other accounting methods like absorption costing for decision making in the end there is a chance to make wrong decisions.
What is the effect of variable costing on net income?
It inhibits projected earing figures and projections.
Does Activity Based Costing produce an accurate costing picture?
Hi Activity Based Costing could be seen as the 'Cause-and-Effect' realtionship in the costs. If we extend this logic then we can segregate all the costs in four sections. a) Product Costs b) Customer Costs c) Business Sustaining Costs d) Cost available to use In this sense the Activity Basedd Costing gives an accurate costing picture.
State the arguments for using marginal costing approach in routine accounting?
- The Marginal costing technique is appropriate for decision making as it highlights those costs (and revenues) which will change as a result of the decision under review being put into effect. - As fixed costs are mostly overheads, and, under marginal costing these are all treated as period costs and charged into the income statement therefore marginal costing avoids arbitrary allocation of overheads to units of output. - Reporting profit on a marginal costing basis will be more closely relates to changes in sales volume and are less affected by changes in inventory levels. - An understanding of the behavior of costs and the implications of contribution is vital for accountants and managers as the use of marginal costing for decision making is universal.
What are Limitations and advantages of marginal costing?
Advantages of Marginal Costing:00.Cost Control: Practical cost control is greatly facilitated. By avoiding arbitrary allocation of fixed overhead, efforts can be concentrated on maintaining a uniform and consistent marginal cost useful to the various levels of management. 1. Simplicity: Marginal Costing is simple to understand and operate; it can be combined with other forms of costing, such as, budgetary costing, standard costing without much difficulty.2.Elimination of varying charge per unit: In marginal Costing fixed overheads are not charged to the cost of production due to this the effect of varying charges per unit is avoided.3.Short-Term Profit Planning: It helps in short-term profit planning by break-even charts and profit graphs. Comparative profitability can be easily assessed and brought to the notice of the management for decision-making.4.Prevents Illogical Carry forwards: It prevents the illogical carry-forwards in stock-valuation of some proportion of current years fixed overhead.5.Accurate Overhead Recovery Rate: It eliminates large balances left in overhead control accounts, which indicate the difficulty of ascertaining an accurate overhead recovery rate.6.Maximum return to the business: The effects of alternative sales or production policies can be more readily appreciated and assessed, and decisions taken will yield the maximum return to the business.
What has OPEC done to limit the effect of nonmember production on its pricing decision?
what has OPEC done to limit the effect of non member production on its pricing decisions?
What influence does the law have on pricing?
Pilferage and shoplifting have an immediate effect on weekly pricing indices.
How is marginal and differential costing used as a tool for decision making?
The Marginal or differential accounting has the basic rule that this accounting method donot consider decisions made previously and only considers the decisions effecting the future so only that information is used for future decision making which is going to effect or change the future decisions and don't considers the decisions made before. So past information is not relevent for future decision making and this is also the main rule which is used by this accounting method if we use other accounting methods like absorption costing for decision making in the end there is a chance to make wrong decisions.
What is the effect of variable costing on net income?
It inhibits projected earing figures and projections.
Does Activity Based Costing produce an accurate costing picture?
Hi Activity Based Costing could be seen as the 'Cause-and-Effect' realtionship in the costs. If we extend this logic then we can segregate all the costs in four sections. a) Product Costs b) Customer Costs c) Business Sustaining Costs d) Cost available to use In this sense the Activity Basedd Costing gives an accurate costing picture.
An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is?
FIFO
What effect do the narrators decisions have on the people of Borneo?
They are worse off than they were before.
The factor that determines what effect human being have on the environment is the?
decisions made by an individual
What effect do the narrator's decisions have on the people of Borneo?
They are worse off than they were before.
What is the relationship between decisions and consequences?
The difference between decisions and consequences is that decisions is when you make up your mind. And a consequence is the effect, result or outcome of something occuring earlier. It can be good or bad !
What are the pricing strategies of Ford?
there are heaps of dungas that enable us to utilize stringbats to full effect. That should help.
What decesion effect cash flow?
Decisions that effect cash flows are receivables collections, amount of inventory to keep on hand, and investment projects. Some decisions such as increasing available inventory are a use of cash, and others are a source of cash.
