Introduction to management accounting Essay Example | Topics and Well Written Essays - 1500 words

Introduction to management accounting - Essay ExampleThe society is also intending to manufacture subjective toothpaste, which is expected to attract a large number of consumers considering that on that point is an increasing attention in regards to health issue. In this respect, the company expects its sales to grow consistently. 2.0 Target merchandising price and make up card The exchange price of the companys products is targeted to be low-priced relative to other similar products on the market. However, the company would take into consideration the be associated with labor, raw materials, direct expenses and other unsettled costs, as well as fixed costs in calculating reasonable prices for both(prenominal) toothbrush and toothpaste. The use would use the peripheral costing with an intention of calculating easily the break-even point (Siegel, & Shim, 2010). The companys direct material cost for every product is expected to be ?0.15 and ?0.1 for toothbrush and toothpaste respectively. The direct labor cost is anticipated to be ?0.05 and ?0.1 for toothbrush and toothpaste respectively. Direct expenses are expected to stand at ?0.05 for every product. Other variable costs would also stand at ?0.05 for toothbrush and toothpaste. ... This would ensure that toothbrush and toothpaste are priced at ?0.5 and ?0.6 correspondingly. In semblance to the market prices, the companys prices would be slightly higher relative to Fluoridine Active Fresh of ?0.45 and Tubes towering Quality of ?0.3. Conversely, it would be relatively lower with respect to Aquafresh of ?6 and Natural Paste of ?7. Additionally, the companys toothbrush prices would comparatively lower to that of other firms on the market. 3.0 Breakeven point In order to draw a bead on the breakeven point, there was a need to calculate the contribution beach per product using the marginal costing principle. In this regard, the company calculated the total variable costs, which was estimated at ?0.3 for each of the product (toothbrush and toothpaste). Moreover, the company subtracted the total variable costs for every product from the selling price to arrive at the marginal contribution for both toothbrush and toothpaste. Given that the selling price of toothpaste is ?0.5 its contribution margin per product is bound to be ?0.2. Similarly, considering that the selling price of toothpaste is ?0.6, then, the contribution margin per product would be ?0.3. For an individual to arrive at the breakeven point, one should calculate the number of products that may result in the profits of a firm being zero (Kieso, Weygandt, & Warfield, 2012). In this regard, it is estimated that 2,000 pieces of toothbrushes should be sold to meet the total fixed costs of ?400. On the other hand, it is expected that 1,500units of toothpastes should be sold to pay the total fixed costs of ?450. The companys average contribution margin is estimated at ?0.25, while the total fixed costs are ?850. As a result, t he company would breakeven by selling a total