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

Introduction to management accounting - Essay ExampleThe come with is also intending to manufacture natural toothpaste, which is expected to attract a bad number of consumers considering that there is an increasing attention in regards to health issue. In this respect, the company expects its sales to grow consistently. 2.0 Target selling impairment and cost panel The selling 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 costs associated with labor, unprocessed materials, direct expenses and other versatile costs, as well as fixed costs in calculating reasonable prices for both toothbrush and toothpaste. The mathematical function would use the marginal 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 res pectively. 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 relation to the market prices, the companys prices would be slightly higher relative to Fluoridine Active Fresh of ?0.45 and Tubes High 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 calculate the breakeven point, there was a need to calculate the function margin per product using the marginal costing principle. In this regard, the company calculated the tot up variable costs, which was estimated at ?0.3 for each of the prod uct (toothbrush and toothpaste). Moreover, the company subtracted the original variable costs for every product from the selling price to arrive at the marginal theatrical role 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, superstar 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, the company would breakeven by selling a total