Startegic Management Accounting
Tables of content
Page No
Introduction
Models and concepts affecting the pricing decision
Approaches to pricing
Cost–volume–profit analysis
Cost plus mark-up pricing
Target rate of return pricing
Standard costing and Variance analysis
The role of standard costing and variance analysis
Limitations of Standard Costing and variance analysis
Evaluation of Activity Based Costing system
Advantages of ABC system
Limitations of ABC system
References
Introduction
This report is mainly focusing to understand and analyse the issues involved in Manac plc where by the company is not meeting target budgeted profit. This is a critical situation where management of Manac plc should understand and evaluate the key strategic management accounting models and concepts which may affect to decisions made with regard to products cost and price.
Manac plc presently uses traditional management accounting concepts such as standard costing and absorption costing methods as a part of its approach to strategic management accounting. The reasons for the company not to achieve target budgeted profit may be that products have not been priced accurately as well as the variances with regard to sales, material cost, labour cost, other variable cost and fixed over head cost have been occurred. Absorption costing method may also have a significant effect on price of the products where by the company may have reached to a lower profit than expected. Since exact reasons for this situation are more complex, we should critically understand and evaluate the companys strategic management approach with a range of strategic management accounting models and concepts. Thus, this report covers following areas which the issues of Manac plc are related to.
An analysis of models and concepts affecting the pricing decision taken by the company.
The role of standard costing and variance analysis in management accounting and its values and limitations.
Evaluation as to the introduction of Activity Based Costing system by replacing current Absorption Costing system.
Models and concepts affecting