Illustrate the marginal cost pricing, Managerial Accounting

Assignment Help:

Marginal cost or incremental cost pricing method:

Here the company may work on the premise of recovering its marginal cost and getting a contribution towards its overheads. This method works well in a market already dominated by giant firms or characterized by intense competition and the objective of the firm is to get a foothold in the market.

In the example of shirts given above the variable cost is Rs 30 per shirt. As long as the firm is able to recover this cost and get a contribution towards its overheads, it is an acceptable pricing method. This will also work when the firm has an inventory of finished goods and it wants to liquidate it. At that time the prime concern is to recover the direct costs. The problem with this method is that it often sparks price wars which is not beneficial to any firm in the industry.

 


Related Discussions:- Illustrate the marginal cost pricing

What is suggestion system, Suggestion system  The suggestion system is ...

Suggestion system  The suggestion system is as integral part of an established management system that aims at involving employees in kaizen. The number of worker s suggestion i

The break even point in dollorsales for rice company, the break even point ...

the break even point in dollorsales for rice company is48,000 and the company's contribution margin ratio is 40 percent. If Rice Company desires a profit of $84,000, how much wou

Security analysis and portfolio management, Security Analysis and Portfolio...

Security Analysis and Portfolio Management Define Capital Market Line and how is it dissimilar from Security Market Line. Describe with illustrations?

Collection policy, Exact management of receivables acquires a suitable coll...

Exact management of receivables acquires a suitable collection policy that outlines the collection procedures. Collection policy consider as the procedure adopted through a firm to

Management decision making, Decision-making is an integral part of all ...

Decision-making is an integral part of all management functions. It is the process of choosing the among alternative courses of action. Managers have to

Steady state condition, Steady state condition In many cases, the Marko...

Steady state condition In many cases, the Markov process will converge to a steady state or equilibrium. In general, as number of transitions `n' increase, the state values

Prisoner''s dilemma- non-zero sum games, Prisoner's Dilemma To understand...

Prisoner's Dilemma To understand the prisoner’s dilemma, let’s consider a story as follows: Two peoples are arrested for a crime. The police lack enough evidence to convict ei

Assignment help , Excercise 2-5 Granger products had the following transac...

Excercise 2-5 Granger products had the following transactions for the just completed month. The company had no beginning inventories. a)$75,000 in raw materials were purchased

Long run shutdown point, what are the factors should be considered before ...

what are the factors should be considered before terminated the operation of a losing firm??

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd