MALİYET VE YÖNETİM MUHASEBESİ

Business managers should take some aspects into consideration while implementing CVP analysis in decision making. The disadvantages of CVP analysis are listed as follows:

Contribution (Margin) is the difference between the unit sales price and the unit variable cost.

Total Revenue (TR) – Total Cost (TC) = Profit (P)

(SP x X) – (V x X) - TFC = P

(2,200 x X) – (1,700 x X) – 1,800,000 = 300,000

500X – 1,800,000 = 300,000

500X = 2.100,000

X = 4.200 units of products

Break Even Point is the volume of production or sales where total costs are equal to revenue.

Businesses should take these four factors into consideration while making pricing decisions (Kaygusuz and Dokur, 2012: 235).

The Use of Cost Information in the Decisions of Outsourcing: Businesses are able to reduce their costs and gain competitive advantage via meeting their activities which are not in their professional field over other businesses specialized in this field. Production businesses can get subcontractors to carry on some services which are out of their production field. In addition to services such as cleaning, security, automation, technical unit, catering service or staff transportation, production businesses may prefer outsourcing in marketing and advertising services

The main function of cost accounting is to produce cost information related to the production activity of the business. The information produced by cost accounting contributes to the following functions:
• Determination of unit cost,
• Providing expense control,
• Planning,
• Contributing special purpose decisions

Decision making is a flexible action. In decision making, the manager’s judgment, intuition, mood, and personal values can also be effective.

It is possible to classify administrative decisions into two categories as programmed (routine) and non-programmed (nonroutine) decisions.

Decisions which are taken in businesses can be classified into three categories: top-level management, mid-level management, low-level management.

Strategic Decisions, Managerial Decisions and Operational Decisions.

As cost information is used within the decisionmaking process and to measure activity, various cost information concepts have emerged. Costs for decision making can be classified as follows:
• Relevant cost
• Sunk cost
• Opportunity cost
• Marginal cost
• Differential cost

We can list the essential factors that have a role in making a profit as follows:

• Price of the product (service) per unit
• Sales amount of the product (service)
• Variable cost of the product (service) per unit
• Total amount of fixed cost of the product (service

Cost-Volume-Profit analysis is the study of the effects on future profit of changes in fixed cost, variable cost, sales price, quantity as a whole

How companies price their products or services are mainly based on supply and demand for products and services. However, on supply and demand,there areeffects of customers, competitors, costs and political and legal regulations. For this reason, businesses should take these four factors into consideration while making pricing decisions. 

Customer Demands

Impacts of the Competitors

Costs

Political and legal regulations

One or more of the following objectives are taken into account in pricing decisions:
• Maximizing profits: Maximizing business profitability is the leading objective of any pricing policy.
• Maintaining or increasing market share: Maintaining and increasing the market
share of the business in the sector is closely related to the pricing decisions.
• Determining socially responsible prices: Today, most of the businesses take various social objectives such as environmental factors, legal restrictions, moral factors into consideration while determining their pricing policies.
• Maintaining the minimum return on investment rate: Businesses consider each
product or service as an investment. They do not invest in any production or service unless they provide a minimum return. Businesses try to determine a price that will provide a minimum return on their investments.
• Being customer focused: It is aimed to make the customer feel that the customer needs and sensitivities have been reflected in the price while determining the prices.
• Maximizing sales revenues: In the case of cash need or uncertainty in the market, businesses can set a price to increase their sales instead of their profits.

Market - skimming pricing strategies can be implemented by the following:
• Market skimming
• Award pricing
• Image - creating pricing
• Retaining pricing

Production businesses are businesses that use advanced technology in production processes and have to follow technology closely. Accordingly, they allocate shares in their budgets so as to purchase new equipment and machines or to renovate the current ones.

Cost-Volume-Profit analysis is the study of the effects on future profit of changes in
fixed cost, variable cost, sales price, quantity as a whole.

Contribution (Margin) is the difference between the unit sales price and the unit variable cost.

500 - 300 = 200 TL

6.000 / 200 = 30 units

Size of the company is not among the factors that taken into consideration while making pricing decisions by businesses.