How manufacturers price products

Article Abstract:

A 1993 survey of 141 manufacturing companies in the US revealed that full-cost pricing was still the preferred pricing method for most of the companies surveyed. Results showed that 69.5% of these companies used full-cost pricing while only 12.1% used variable-cost pricing. Among the 98 companies that used full-cost pricing, 48 companies used the 'percentage of manufacturing cost' method, while the remaining 50 used the 'percentage of all costs' method. Meanwhile, among the 17 companies that used variable-cost pricing, eight companies used the 'percentage of variable manufacturing cost' method, while the remaining nine used the 'percentage of all variable costs' method. Analysis of the results revealed a link between pricing method and use of activity-based costing (ABC) systems. As a rule, companies unwilling to consider implementing ABC were also more likely to stick to traditional full-cost pricing methods.

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Management accounting in the era of electronic commerce

Article Abstract:

Management accountants should recognize the potential impact of Internet-based electronic commerce on their profession. Electronic commerce involves all internal and external business activities and transactions conducted through the Internet or Internet-type computer networks. Electronic data interchange systems and enterprise-wide information systems are two of the emerging tools for electronic commerce that can be facilitated via the Internet. Through such systems, management accountants are given an operational set of comprehensive organizational and global decision-support systems that can communicate with external and internal sources. Therefore, with the use of Internet technology, the analytical capacity, relevance and coverage of management accounting becomes greater.

Telegraph & other communications, Specialized Telecom Services, Wired Telecommunications Carriers, Evaluation, Internet, Internet services, Telecommunications systems, Electronic commerce, E-commerce, Managerial accounting

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A modest proposal for pricing decisions

Article Abstract:

The best way to deal with historical depreciation expense when making product pricing decisions is to ignore it altogether. It is argued that the amount a company has spent in the past to make capital acquisitions should no longer be considered for product pricing purposes since this cost is not relevant in ensuring the future success of a product. Furthermore, using depreciation expense in making pricing decisions can actually give companies a false sense of security and success. Rather than considering historical depreciation, it is proposed that average future capital requirements be included. This can be done by producing the cost element 'capital acquisition allowance' and incorporating it into individual products.

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