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Management Accounting - Essay Example

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Summary
The research delves on the profitability of marketing two car models. The research delves on cost benefit analysis. Enhanced decision making includes proper costing and pricing strategies.
Section A: Chosen business and…
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Management Accounting
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Download file to see previous pages The cost of each Renault car is £ 12,000 (Crosson, 2011). The company’s expenses will include fixed expenses and variable expenses (Noreen, 2008). On the other hand, the company pays for variable expenses. The variable expenses fluctuate or change in the same direction as the car revenues (DuBrin, 2009). Comparison with Competitor’s Price. The above Table 1 information shows sales prices are pegged on the Skoda car competitor’s selling prices. The above table indicates that the company’s Skoda selling price is lower than the competitor’s car selling price in order to increase customer demand for the Skoda (Hartline, 2011). In the same manner, the company is selling its Renault car at a selling price that is lower than the competitor’s selling price. The lower price is a marketing strategy to increase revenues (Buttle, 2009). Since the prices are lower, the company expects to generate high Skoda and Renault car revenues (UKCardiscount, 2012).
In addition, the above table 2 data indicates the sales prices of the company’s Renault car in relation to the competitor’s selling price (Chandler, 2011). The above table indicates that the current and future customers can save more money if they purchase the company’s lower priced Renault car, when compared to purchasing the competitor’s car (UKCardiscount, 2012).
Further, the table 3 data clearly shows the company’s fixed expenses (Glencoe, 2011). The fixed expenses include the flat rent, electricity, water, telephone, garbage, and other expenses (Levine, 2008). The increase in the car sales normally does not significantly influence the fixed expenses. The fixed expenses are period expenses (City-data, 2012).
Furthermore, the table 4 statistical data clearly shows the company’s variable expenses. When the sales increase, the variable expenses also increase (Miltenburg, 2005). In the same manner, when the sales decline from one accounting period to ...Download file to see next pagesRead More
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