Manac Plc Case Study

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List of Content List of Content 2 Introduction 3 Presentation of Findings 3 Task 1 3 Short-run pricing decision 4 Long-run pricing decision 4 Pricing policies 6 Price skimming policy 7 Penetration policy 8 Recommendation 8 Task 2 9 Standard Costing 9 Sales volume variances 11 Sales price variance 12 Labour variance 12 Recommendation 13 Task 3 13 Activity based costing 13 Absorption Costing System 15 Recommendation 16 Introduction Manac Plc produces and sells a wide range of standard electronic goods. The production and sales take place in different countries around the world. Currently, Manac plc is using standard costing and absorption costing as part of its strategic management accounting. The Board of Directors is concerned that the Manac Plc is not meeting its budgeted target profits. This report is written to take a closer look for variances which might be reasons for the lower profits. The report will have a closer look at following topics: a. The models and concepts affecting the pricing decision and their usefulness b. The use of Variance analysis and its limitation. c. The advantages and disadvantages of introducing an Activity Based Costing system to replace the current Absorption Costing system. Presentation of Findings Task 1 First of all it has to be decided if the company is a price setter or a price taker. A price setter is a company, usually one who has a monopoly in their market, that has enough influence to set the demand and price of their product. A price taker on the other hand is a company that is not influential enough to have an effect on the price of a product. In the business world a firm might be a price setter for some products and a price taker for other (Drury, 2009). Short-run pricing decision Cost information has an important impact on the pricing decision. The

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