The use of activity-based costing in pricing decisions - the example of prune production
Abstract
This paper explores the scopes of use of costing information for setting product prices in a competitive market. Setting the optimum product price that reconciles shareholders' and customers' long term goals has never been more difficult. Previous researches have proved the paramount importance of costs for pricing decisions. This paper investigates the influence of ABC costing information on pricing decisions and argues on their dominance over traditional costing systems. Using the hypothetical example of a prune producing company, the analysis reveals significant differences between traditional and ABC cost prices of products, highlighting the benefits of ABC approach. Tracing costs to various production-related activities within a company, the ABC model gives a detailed insight into the types and amounts of costs of attaining specific product characteristics and satisfying different customer demands. This way, the ABC provides the management with considerable discretionary power for... pricing decisions, setting a sound basis for product and customer profitability management as well as for the creation of long-term value for shareholders.
Keywords:
pricing / cost allocation / activity-based costing / prune productionSource:
11th International Days of Statistics and Economics, 2017, 1718-1728Publisher:
- Melandrium, Slany
Collections
Institution/Community
Poljoprivredni fakultetTY - CONF AU - Vasilić, Marina PY - 2017 UR - http://aspace.agrif.bg.ac.rs/handle/123456789/4436 AB - This paper explores the scopes of use of costing information for setting product prices in a competitive market. Setting the optimum product price that reconciles shareholders' and customers' long term goals has never been more difficult. Previous researches have proved the paramount importance of costs for pricing decisions. This paper investigates the influence of ABC costing information on pricing decisions and argues on their dominance over traditional costing systems. Using the hypothetical example of a prune producing company, the analysis reveals significant differences between traditional and ABC cost prices of products, highlighting the benefits of ABC approach. Tracing costs to various production-related activities within a company, the ABC model gives a detailed insight into the types and amounts of costs of attaining specific product characteristics and satisfying different customer demands. This way, the ABC provides the management with considerable discretionary power for pricing decisions, setting a sound basis for product and customer profitability management as well as for the creation of long-term value for shareholders. PB - Melandrium, Slany C3 - 11th International Days of Statistics and Economics T1 - The use of activity-based costing in pricing decisions - the example of prune production EP - 1728 SP - 1718 UR - https://hdl.handle.net/21.15107/rcub_agrospace_4436 ER -
@conference{ author = "Vasilić, Marina", year = "2017", abstract = "This paper explores the scopes of use of costing information for setting product prices in a competitive market. Setting the optimum product price that reconciles shareholders' and customers' long term goals has never been more difficult. Previous researches have proved the paramount importance of costs for pricing decisions. This paper investigates the influence of ABC costing information on pricing decisions and argues on their dominance over traditional costing systems. Using the hypothetical example of a prune producing company, the analysis reveals significant differences between traditional and ABC cost prices of products, highlighting the benefits of ABC approach. Tracing costs to various production-related activities within a company, the ABC model gives a detailed insight into the types and amounts of costs of attaining specific product characteristics and satisfying different customer demands. This way, the ABC provides the management with considerable discretionary power for pricing decisions, setting a sound basis for product and customer profitability management as well as for the creation of long-term value for shareholders.", publisher = "Melandrium, Slany", journal = "11th International Days of Statistics and Economics", title = "The use of activity-based costing in pricing decisions - the example of prune production", pages = "1728-1718", url = "https://hdl.handle.net/21.15107/rcub_agrospace_4436" }
Vasilić, M.. (2017). The use of activity-based costing in pricing decisions - the example of prune production. in 11th International Days of Statistics and Economics Melandrium, Slany., 1718-1728. https://hdl.handle.net/21.15107/rcub_agrospace_4436
Vasilić M. The use of activity-based costing in pricing decisions - the example of prune production. in 11th International Days of Statistics and Economics. 2017;:1718-1728. https://hdl.handle.net/21.15107/rcub_agrospace_4436 .
Vasilić, Marina, "The use of activity-based costing in pricing decisions - the example of prune production" in 11th International Days of Statistics and Economics (2017):1718-1728, https://hdl.handle.net/21.15107/rcub_agrospace_4436 .