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Essay / Research Paper Abstract
This 4 page paper looks at three questions concerning costing. The first looks at whether or not activity based accounting is the best approach for the twenty-first century. The second questions concerning times when more traditional accounting practices are appropriate. The last question looks at the value of cost profit volume (C-P-V) accounting can b useful. The bibliography cites 6 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEcostqu.rtf
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Unformatted sample text from the term paper:
existing level. When the overheads are high and the marginal cost is low this can be a very tempting strategy. However, as Harvey (n.d) states there is a string potential
that this could then under value a product. If passengers on an airline pay a high price for their seats but then discover that if they leave it until the
last minute to book they may get a very low rate, more are likely to leave late to book in order to gain the lower prices. This can then become
a negative cycle where the airline has more seats empty due to the delayed bookings and then has to discount more seats to sell them. Using this marginal approach there
will be a point reached where the fixed costs are not coved, and the firm starts making a loss on the flight or has to curtail it. The idea that
people may wait to book in order to get a cheaper price and the potential for undervaluing the product us supported by marketing research (Kotler and Keller, 2008). The
use of alterative methods, such as activity based costing, where the true cost of providing each seat may be more advantageous, the firm is more likely to make realistic pricing
decision, this may mean less discounted flights as the flight time gets closer, but it may also mean that there is not over pricing earlier which may be putting passengers
off purchasing. The knowledge of the true cost, with both fixed and variable costs included will enable businesses to make better pricing decisions, where costs are covered, which will help
the firm to survive by remaining profitable. It will also help the firm to understand better the underlying costs and encourage better cost management for the products that are offered,
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