McGrew_MBA 733 Week 4 Discussion Issues

McGrew_MBA 733 Week 4 Discussion Issues - Trish McGrew MBA...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Trish McGrew MBA 733, Prof. Bowsher, Assignment 4-2, January 28, 2011 a. “I work for a non-profit organization, so all this talk of the full cost of your product or service really isn’t applicable me” This is a false statement. The cost accounting practices of nonprofit organizations are similar to those of profit-orientated organizations. Both nonprofit and profit-orientated organizations use resources; and in both cases resources need measured (Anthony, Hawkins, Merchant, 2011). Most nonprofits share three common elements. First, the need for operational and/or capital dollars exceeds what they currently have. Second, most public charities are doing good things in the communities they serve, and third, in order for a nonprofit to last they must operate like a business! Full cost pricing which takes into consideration both variable and fixed costs and adds a % markup. The other is direct cost pricing which are variable costs plus a % markup, the latter is only used in periods of high competition as this method usually leads to a loss in the long run. b. “Why would anyone use target costing? It is just too risky if you don’t cover your costs.” Target costing is defined as a cost management tool for reducing the overall cost of a product over its product life cycle. Management utilizes this pricing technique to meet both the demands of its customers as well as company profit goals. Target costing is particularly popular among Japanese firms such as Toyota, Nissan, Toshiba and Daihatsu Motor in various industries such as automobile manufacturing, electronics, machine tooling, and precision machine manufacturing (Anthony, Hawkins, Merchant, 2011).
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

McGrew_MBA 733 Week 4 Discussion Issues - Trish McGrew MBA...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online