Managerial Accounting

The purpose of pricing decision and profitability analysis to assist management in planning and controlling the resources of their organisation, and enhancing company’s decision making. Organisations that sell products and services that are highly customised or differentiated from each other by special features, or who are market leaders, have some discretion in setting prices. The cost of information that is accumulated and presented is therefore important for pricing decisions.

 By the end of this lesson, you should be able to:

• Discuss the three major factors that affect pricing decisions.
• Discuss the cost of allocations, and
• Compute the target costing approach to pricing.