The need for cost accounting came with increased
industrialization, engineering an expansion in manufacturing. It is
therefore obvious that in efficient system of costing is essential for
industrial control. The topic, “Cost Accounting Information and Price
Determination” Is teaching about cost accounting when adequately treated and
its uses to the management of the organization in its planning and
decisions. And here, we are trying to apply cost information which is
efficiently determined to pricing policy decision. There is not yet an agreed
best method of costing products though it may be helpful to recognize that cost
allocation are being used to obtain a mutually acceptable price and not
necessary to portray caused and effect relationship of cost
incurrence. But price determination from cost under efficient
operation through efficient cost system will most probably approximate the
price of the product to its value.
TABLE OF CONTENTS
Statement of problem
Purpose of study
Significance of limitation of study
Scope and limitation of study
Definition of terms
Fixed and variable cost
Natural and functional classification cost
Other theoretical work on cost and pricing
The Nature of Pricing problem
Limitation of cost oriented price
Cost bread pricing theories
Price to achieve corporate objectives
Summary of Study
Discussion of findings
Background of the Study
There are no more important decision in market affairs than those
connected with pricing.
No matter how intelligently the product, distribution and
communication mixes are conceived, improper pricing of a production one of the
reason is that price decision cut across all areas of business operation say
“Fred Foy” (1980:P143).
This research therefore, among other things intends to highlight
an management seemingly indifference towards this all important issues.
Through the cost structure especially as it effects a manufacturing industry
constitutes the major determinant of the price product of firms which vary with
circumstances, types of the commodity services rendered.
Before delving into some of these other factors that influence
product price, let us look at some of these factors at play in the cost and of
beer, component of the cost structure also include:
a.Historical Accounts: Since
actual figures of cost and revenue obtained from previous periods in a steady
economic activities affects management can use information from it to determine
the price of a product.
b.Budgeted Costs: Management
often base its policy on the information system through which cost can be
estimated, usually applied in a newly established firms.
c.Market Forces: Demand
and supply; the price of beer is affect by factor in the market because it
cannot be rigid in its pricing, since it is a price taker, so with high demand
the price of beer increase and the reverse is the case.
d.Capacity of the Factor: This
refers to the quantity of the product that can be produced in a run. The
factory with large size will produce and sell it in lesser price than a small
sized ore. For example, Life Breweries has a capacity of about 500 hectoliters
of a 6million cartoons per year while premier has a capacity of 1200
hectoliters. Under normal circumstance, premier should be cheeper.
e.Raw Materials: Beer
Brewing requires three major raw material viz. Malt, Maize and Hop (Malt
Extract). Malt constitutes the major cost of beer, and Malt and hop are
being imported. When price of all those materials increases the price of
beer increase and visa versa. Example when the price of Malt was
N20,000.00 per tone, a carton of beer sales for N600.00 each but now it has
gone to N35,000.00 and I sale for N1000.00per carton. Other factor
includes efficiency, economic trends.
Statement of Problem:
The study is geared towards the solution of the problem
encountered by management in pricing and marketing their products due to
inadequate or misleading accounting information. Instances are where
management had unknowingly continued selling products below out of pocket
cost. This researcher intends to provide several cases and simulations
and through proper analysis of these, management would have learnt the best
method of analyzing its costs to obtain adequate information necessary
for pricing policy.
Purpose of Study
The project will attempt to:
a.X-ray the element of cost involves in the
brewing of beer and the extent to which the cost of price of beer is being
influence by the actual cost of production.
b.Through the ideal of the actual cost figures
involves in the price of beer, other factors at play in the determination of
the price of beer will be known.
c.To determine an appropriate condition and
environment for proper collection and analysis of cost.
Significance of the Study
The essence of cost accounting information came to mind when one
realizes that in the modern world of industrization that no firm can survive
without properly costing its products.
And any firm that does
not know its information as regards costs, stands the chance of pricing itself
out of the market. The greatest weapon, which a firm can use against its
opponents to maximize efficiency is proper costing. Ever if price ceiling
exists, the firm will still in a position to maximize its profits that
is, reduction in cost without equivalent reduction in price leads to increase
The more costs are
minimized based on information gained, the higher the profit will be and this
is a position increase in government tax hence dissuade the use of the ‘market
watch department” as the pricing guide to some manufacturing industries
especially the beer industry in which m case study is not exempted.
TERMS AND CONDITIONS APPLY
For more informations on project materials and more