Marginal Costing
In highly competitive markets, some companies may want to consider turning to marginal costing to ensure that their products are competitively priced. Marginal costing ignores the fixed cost incurred by companies, on the assumptions that these costs will be incurred by domestic sale anyway, whether or not the company exports and therefore only variable costs need to be considered in export pricing. Ignoring fixes costs will naturally reduce total costs, enabling lower prices to be set. Where
possible, however, companies should not resort to this method of pricing.
Marginal Costing In highly competitive markets, some companies may want to consider turning to marginal costing to ensure that their products are competitively priced. Marginal costing ignores the fixed cost incurred by companies, on the assumptions that these costs will be incurred by domestic sale anyway, whether or not the company exports and therefore only variable costs need to be considered in export pricing. Ignoring fixes costs will naturally reduce total costs, enabling lower prices to be set. Where possible, however, companies should not resort to this method of pricing.
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