Some practical techniques to improve profitability: Focus decision-making on the most profitable areas. Concentrate on products and services with the best margin will protect or enhance profitability. ● TECHNIQUES TO IMPROVE PROFITABILITY • Decide how to treat the least profitable products. These often drift, with dwindling profitability. Turn around a poor performer (by reducing costs, raising prices, altering discounts or changing the product) or abandon it to prevent a drain on resources and reputation. ● Make sure new products enhance overall profitability. New product development often focuses on market need or the production process. with insufficient regard to cost, price, sales volume and overall profitability, which are inextricably linked. ● Manage development and production decisions. The amount spent on research, as well as the priorities and methods used, affect profitability. • Set the buying policy. For example, should there be a small number of preferred suppliers or a bidding system among a wider number of potential suppliers?
Some practical techniques to improve profitability: Focus decision-making on the most profitable areas. Concentrate on products and services with the best margin will protect or enhance profitability. ● TECHNIQUES TO IMPROVE PROFITABILITY • Decide how to treat the least profitable products. These often drift, with dwindling profitability. Turn around a poor performer (by reducing costs, raising prices, altering discounts or changing the product) or abandon it to prevent a drain on resources and reputation. ● Make sure new products enhance overall profitability. New product development often focuses on market need or the production process. with insufficient regard to cost, price, sales volume and overall profitability, which are inextricably linked. ● Manage development and production decisions. The amount spent on research, as well as the priorities and methods used, affect profitability. • Set the buying policy. For example, should there be a small number of preferred suppliers or a bidding system among a wider number of potential suppliers?
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 12MC: Which statement is correct? A. Activity-based cost systems are less costly than traditional cost...
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