Impact of Cost Accounting Information on Price Determination
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Impact of Cost Accounting Information on Price Determination

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– Impact of Cost Accounting Information on Price Determination –

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Abstract

This research study was conducted to determine the impact of cost accounting information on price determination in some manufacturing companies in Nigeria. The objectives of the study were to determine the components of manufacturing cost information and also to identify the lapses therein.

Literature review on the topic was aimed at cost determination, cost control concept, cost performance evaluation, direct and indirect cost and fixed/variable cost.

Data collected were analysed using frequency table and chi-square. The result of data analysed showed that cost accounting information contribute a lot on price determination of products.

Introduction

The studies of modern cost accounting yield an insight into both the accountant and management roles in an  organization.  Management in most cases wants to know how performance is measured and often depend on accounting information for guiding their decisions.

Decision making in this context is defined as making purposeful choosing from among a set of alternative cause of action in light of some objectives.

Cost accounting has a main purpose of accumulating cost of an organizational products and services. Managers of manufacturing companies can use product cost information as a guide in setting selling prices and for inventory valuation and profit determination.

According to Adeniyi (2000:10), cost control/reduction involves the predetermination of cost and comparison of predetermination budgeted or standard cost with the actual cost.

Standard cost which is closely linked with the budgeted is predetermined per unit cost, usually analyzed into elements: Direct Material, Direct Labour and Factory overhead.

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