Five Forces

Topics: Cost, Costs, Price Pages: 2 (582 words) Published: March 29, 2013
* Example:
* Let’s take the Sky TV case as a typical example of penetration pricing. Sky TV is launched with a very low price, when many companies started using them, their prices continued to climb, however the product offered is good, so it continues to be used. This example also means that when Manac applies this method for their customized product, they need to concern more about after-sale service. * For instance, Manac is specializing in electrical goods, thus, the safety as well as the direction of the complex equipment need to be guiding obviously for buyer. Besides, they should take into account for services such as warranty, free-repairing and so on aimed at maintaining the loyal customer in using Manac commodities.

* Activity-based costing (ABC) is an accounting method that allows businesses to gather data about their operating costs. Manac’s manager can take into account the overall production costs as cost of sales and administrative cost not just confined to generate data to create a better budget and gain a greater overall understanding of the expenses that are required to keep the company running advantageously and avoiding mistakes in decision-making. * In addition, the ABC uses a system of allocation criteria relevant to each specific operation. These targets cost allocation for clear causal relationship between the expenses incurred for each activity and the level of participation of each activity and the production process. With the system of distribution of accurate and complete accounting can more accurately reflect the actual level of resource consumption of each product. * The ABC method accounts for costs similar to the way production work is performed, allowing your business to better understand where overhead costs are going. The data can identify wasteful products and unnecessary costs, so that resources can be used productively. The method also helps to fix the price of products or services that are excessive or...
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