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

Define activities based costing by horngren, Define Activities based costin...

Define Activities based costing by horngren According to horngren " ABC is a system that focuses on activities as fundamental cost object and utilizes cost of these activi

C-v-p analysis under uncertainty, C-V-P ANALYSIS UNDER UNCERTAINTY A ma...

C-V-P ANALYSIS UNDER UNCERTAINTY A major limitation of the basic C.V.P analysis is the assumption that the unit variable cost, selling price and the fixed costs are constant an

Evaluate marginal cost, 1. If the marginal cost of producing a good is incr...

1. If the marginal cost of producing a good is increasing as a firm produces more of the good, then which of the following must be true? a. AFC is rising               b. AVC i

What is kaizen, What is kaizen Kaizen is the Japanese term for continuo...

What is kaizen Kaizen is the Japanese term for continuous improvement. The kaizen concept was pioneered by in Japan by Toyota as daily challenge to all its to improve their pro

Objective function, Objective Function Although the standard LP model c...

Objective Function Although the standard LP model can be either the maximization or the minimization type, it is sometimes useful to convert one form to the other. The maximiz

Queuing theory, QUEUING THEORY When limited facilities fail/delays to s...

QUEUING THEORY When limited facilities fail/delays to satisfy demands made upon them, problems occur which generate queues or waiting lines. Illustrations are: •    Customers

State the debtors turnover ratio, Debtors turnover ratio( or receivables tu...

Debtors turnover ratio( or receivables turnover ratio) Meaning: this ratio establishes a relation ship between net credit sales and averages trade debtors.   Objective

Cost classifications, explain briefly variable cost, fixed cost and semi- v...

explain briefly variable cost, fixed cost and semi- variable in the production cost of a productor service, giving example for each

Ira, Your financial advisor has recommended that you invest into your Roth ...

Your financial advisor has recommended that you invest into your Roth Individual Retirement Account (Roth IRA) the sum of $5,000. If you put in $5,000 today, what will this investm

Explain quality control and total quality control, Explain Quality control ...

Explain Quality control and Total quality control Quality control (QC) circles can be viewed as a group oriented suggestion system for making improvements. QC circle is a sm

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