job order and process cost system
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1. In your opinion, what process should a cost accountant follow in order to determine the prices that are best for her company? Give a specific plan. In addition, give an example and citations to support your response.
2. What happens when company costs are not properly determined? Give an example of a company that has suffered, in the past five years, because company costs exceeded company profitability? What should the company cost accountants have done to prevent this loss? Give an example and citations to support your response.
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Solution Summary
Your tutorial is 325 words plus two references and discusses the best costing strategy and a bankruptcy that resulted from costs not being properly understood.
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1. In your opinion, what process should a cost accountant follow in order to determine the prices that are best for her company? Give a specific plan. In addition, give an example and citations to support your response.
The best way to set prices is using a target costing approach. This starts with what the market is willing to pay for a product with certain features and then back out the required profit margin to figure out what the firm can spend to produce it.
So, if you think you can sell a blackberry for $200 and you want a 50% profit margin, you need to produce it for $100. Firms that can't do this, typically just drop the idea and move on to another ...
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