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PROJECT TOPIC- COST ACCOUNTING INFORMATION AND PRICE DETERMINATION: A STUDY OF PREMIER BREWERIES, ONITSHA

PROJECT TOPIC- COST ACCOUNTING INFORMATION AND PRICE DETERMINATION: A STUDY OF PREMIER BREWERIES, ONITSHA

ABSTRACT

This work titled “Cost Accounting Information and Price Determination: A Study of Premier Breweries, Onitsha”. This research is aimed at assessing the influence of prime cost information on the determination of products price in Premier Breweries, to assess the influence of overhead cost information on the determination of price of products in Premier Breweries, to assess the influence of manufacturing cost information on the determination of price of products in Premier Breweries. The researcher adopted survey research design, data were collected and analysis using Chi-square statistical tools. Based on the analysis it was recommended that pricing should be carried out by a joint effort between the top management and the sales personnel. These function should not be left alone to the top management because though they may be able to quote prices profitable to the firms, they will be unable to the quote prices that will be reasonable to the customers they the sales staff will be in a better position to do this, firms must state explicitly their pricing objective and every pricing policy adopted must be geared towards achieving those stated objectives also, the firm’s pricing objective must be in line with the firm’s overall objectives and not conflict each other. There must be a unity of purpose, firms should establish an information and survey department in order to obtain such information as will be necessary in order to gain control over changing pricing situation, since the price setting environment is very dynamic.

CHAPTER ONE

INTRODUCTION

  • Background to the Study

There are no more important decision in market affairs than those connected with pricing. No matter how intelligently the product, distribution and communication mixes are conceived, improper pricing of a production is one of the reason that price decision cut across all areas of business operation say Fred (1980). However in explaining the importance of pricing, Egbunike (2007:83) sustained that setting the price for an organizations product or service is one of the most difficult, due to some number of variety of factors that must be considered.

The primary decision arises in virtually all types of organization, just to mention but a few of them such as manufacturers set prices for their products, they manufacture, merchandising companies set prices for their goods, service firms set prices for such services as insurance policies, bank loans etc. Through the cost structure especially as it effects a manufacturing industry constitutes the major determinant of the price product of firms which vary with circumstances, types of the commodity services rendered.

Before delving into some of these other factors that influence product price, let us look at some of these factors at play in the cost and of beer, according to kotler (2006), opined that the component of the cost structure also include:   Historical Accounts, since actual figures of cost and revenue obtained from previous periods in a steady economic activities affects management can use information from it to determine the price of a product, budgeted costs, management often base its policy on the information system through which cost can be estimated, usually applied in a newly established firms.

Demand and supply; the price of beer is affect by factor in the market because it cannot be rigid in its pricing, since it is a price taker, so with high demand the price of beer increase and the reverse is the case. Elegonye (2001) opined that cost and management accounting are parts of accounting discipline which have developed to meet up with the progress in technology advancement, production, sales and finance.

Theses aspect according profession and made it more useful to modern business. It is evident that management has a big responsibility before setting and adopting the most advantageous pricing policy and the most effective profit plan for their firms, since prices are not set arbitrarily therefore management must focus on all the important factors in setting its price. Thus, it has become imperative to investigate the effectiveness of pricing policy and profit planning in Nigerian organizations. 

PROJECT TOPIC- COST ACCOUNTING INFORMATION AND PRICE DETERMINATION: A STUDY OF PREMIER BREWERIES, ONITSHA   

  • Statement of the Problem

Hilton (1991) observed that both the market forces of demand and supply and the cost of production have a Significant bearing on determining prices. Equally he explained that there are other variables that influences pricing decisions according to him, this includes: Manufacturer’s pricing objective, economic situation, level of competition, and availability of close substitute. For pricing to be effective, firms must incorporate all these factors in selecting the most advantageous price for it’s product.

At times, firms are not in the habit of considering these factors and this has led to the shutting down of many factories, downsizing of workforce and in most cases, winding up of firm’s (Hilton, 1991:201). Profit plan are made in form of budget and they help firms to forecast the level of profit, cost and revenue, they intend to generate in order to gain competitive advantage. Unfortunately many firms still do not prepare these plans, thus, this has led firms undertaking unplanned ventures resulting in escalation and inability of firms to foresee shortage in resources or finance or personnel needed in the future operation of the firm. Where no plans exist, there will be no basis for firm to compare or evaluate their performance.

1.3 Objective of the Study

The broad objectives of the study is to examine cost accounting information and price determination: specifically the objectives are as follows:

  1. To determine whether accounting information is necessary in an organizational.
  2. To ascertain the extent in which accounting information generated by accounts department has contributed to organization in terms of decision making process.
  3. To ascertain the effect of price determination to organizational management.
    • Research Question
  4. What are the need of accounting information in an organization?
  5. To what extent has accounting information generated by accounts departments contributed to organization in terms of decision making process?
  • What are the effect of price determination to organizational management?

1.5 Research Hypothesis

Ho: accounting information is very important in an organization.

H1: accounting information is not important in an organization

Ho: accounting information generated by accounts departments has contributed to organization in terms of decision making process.

H1: accounting information generated by accounts departments has not contributed to organization in terms of decision making process.

1.6     Significance of the Study

This research will serve as a guide to firms in setting the most advantageous pricing policy giving its individual unique situation which will enhance profitability in the short and long run situation. It will help them to avoid choosing arbitrary prices without considering its distinctive situation and important factors. It will serve as a guide in choosing pricing strategy which strikes a balance between what the consumers wants to pay for a product and the price the firm is willing to sell; also this research will expose them (the firm) to the need for accounting information in carrying out this decision.

The findings of this study will also be useful for the economy in the sense that if firms have substantial control over price setting, then their pricing behaviour can influence national output/income and hence community welfare. Finally, the research work will be useful for those carrying on further research on this or related topic.

 

1.7. Limitation of the Study

 The researcher is limited by time constraints. Since the semester is very short and has a bulk of academic exercise.

 The un-complying attitude of some of the administrators and workers in responding to my question to enhance data/information collection resulted in a lot of time which would have been used for my study was exhausted in the work.

Finally, inadequate fund was also limiting factor in this study as this made it difficult to source some of the secondary data/information needed.

1.8     Definition of Terms.

PRICING POLICY: It is a guiding philosophy or course of action designed to influence and determine pricing decisions. Pricing policies set guidelines for achieving objectives.

PROFIT PLAN: The profit plan is the operating plan detailing revenue expenses and resulting to net income for specific period of time. It is the firm’s optimal plan in the light of management expectation in future.

COST: Expenses incurred to procure something which may be labour, material, facilities or resources

EFFICIENCY: Ability to work or produce well, without wasting time or resources.

EFFECTIVENESS: Producing the intended result.

FIXED COST: Cost that remains constant within a level of production. It does not vary with production.

MARKETING MIX: The combination of the far primary element that comprises a company’s marketing programme which are price, product, place and promotion (advertising)/

VARIABLE COST: They are cost that varies with level of production. They are constant per unit but vary with total production.

STRATEGY: Strategy is a general statement of the vary in which an organization plans to achieve its objectives. The strategy contains the basic approach but not the details of how a firm plans to attain its objective.

SHORT RUN: It is a period of time that is less than one year. The firm is unable to vary all its input in this span of time.

LONG RUN: It is a period of time sufficiently long to allow the firm to change the physical amounts of all resources in its production. It is usually five (5) years and above.

PROJECT TOPIC- COST ACCOUNTING INFORMATION AND PRICE DETERMINATION: A STUDY OF PREMIER BREWERIES, ONITSHA

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