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Essay / Research Paper Abstract
This 5-page paper examines various accounting concepts and ties the costing elements into pricing decisions for Starbucks. Bibliography lists 5 sources.
Page Count:
5 pages (~225 words per page)
File: D0_MTacctstar.rtf
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Unformatted sample text from the term paper:
know the cost element of their pricing decisions. The job here is to identify cost information necessary to calculate the price of the consumer durable good.
Before we move forward on this, lets look at some definitions. In accounting, total costs consist of the sum of fixed costs, variable costs
and semi-variable costs involved in producing a good (Total Cost, 2009). A fixed cost, in the meantime, is a cost that doesnt deviate or vary depending on production or sales
levels. Typical fixed costs include rent, taxes, insurance or interest expense. Variable costs, on the other hand are - variable. They change
according to the volume of production units (which rely on sales) (Variable Cost, 2009). These can include cost of labor, materials and overhead (Variable Cost, 2009). Sometimes the term production
cost is also used (though this is rare. Production costs are the combined costs of raw material and labor in production of a good (Production Cost, 2009).
In a Starbucks scenario, fixed costs would be rent that might be paid for the retail outlets and taxes paid on profits earned. If
there is any outstanding debt, the interest on that would also be a fixed expense. The variable costs, on the other hand,
would be labor (employees), raw goods (such as coffee beans and the money paid to the growers, who would be suppliers) and any supplies associated with the manufacture of the
beans into coffee. With the above in mind, we have two methods to allocate the fixed costs, and these would be activity
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