Lipman Bottle Company Annotated Bibliography

Lipman Bottle Company Annotated Bibliography
Lipman Bottle Company Annotated Bibliography

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Lipman Bottle Company Annotated Bibliography

Aurora, B.-B. C. (2013). The Cost of Production under Direct Costing and Absorption Costing: A Comparative Approach. Annals of the “Constantin Brâncuşi” University of Târgu Jiu, Economy Series, 2, 123-129.

            The author of this article stresses on the importance of managerial accounting with regards to balancing production costs and pricing of finished products in a company’s strategic management, especially to help managers in optimizing their decisions particularly those concerning operating activities. The emphasis of the author is focused on the role of managerial accounting in calculating costs (both fixed and variable), measurement of inventory costs as well as prices and prices of services and products.

As a result, the system of cost calculation is prioritized in this article because it tends to vary on basis of the type of costs assigned to items and according to the costing theory two main systems of cost calculation adopted are: full cost accounting, which comprise of all production costs, and partial cost accounting comprising of variable costs that vary with output.

Hence, considering that full as well as partial costing in production in terms of fixed and variable costs play a crucial role in determining the prices of finished products, this article provides valuable insights on how the balance between costing and pricing can be effectively achieved. The author outlines a comparative approach with regards to the differences between cost of production calculation under absorption costing and direct costing. This article further examines the impact of utilizing each of these systems of calculation on companies’ financial performance as well as financial position with regards to reported income statement and financial position statement.

Lipman Bottle Company Annotated Bibliography

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This article concludes by discussing the benefits of direct costing use in manufacturing companies for their internal reporting, bearing in mind that this method of costing is unacceptable for external reports that are presented to shareholders as well as other external uses. However, direct costing method is very important for companies to appropriately make production decisions. The article also fits very into Lipman Bottle Company case because of the insightful information it can provide to the company management to solve its production dilemma and settle on the most appropriate and profitable production mix based on informed decisions.

Banker, R. D. & Hansen, S. C. (2002). The Adequacy of Full-Cost-Based Pricing Heuristics. Journal of Management Accounting Research, 14, 33-58.

            Authors of this article base their discussion on performance investigation of a full-cost heuristic within a service setting focusing on costs involved in providing a service eventually influence the pricing of such services. Based on the full-cost heuristic model, authors of this article state that service companies periodically determines the extent of capacity, prices as well as price discounts. In the context of price, the article examines a scenario of a stochastic number of customers placing orders for a service and reports that when in a certain period there are too many orders; a service company offers price discounts to customers willing to come back for the same service later.

The authors of this article further examines how closely a company’s optimal performance can be approximated using two heuristic approaches that are distinct such as full-cost pricing heuristic and modified full-cost pricing heuristic. The results of the analysis full-cost pricing is the best-performing heuristic when conducted upon a program towards firm’s optimization on basis of constrained version in which prices are set using full costs in addition to adjustments on basis of nonlinear elasticity demand.

However, the article also suggests that in settings where pricing choices and capacity choices are made before and after demand information respectively, modified full-cost heuristic may be perform relatively well but not for long before it starts to deviate. These pricing models are highly applicable to the Lipman Bottle Company situation since the company needs to determine it optimal performance by setting prices of products based on its capacity, full cost of production and demand meaning that full-cost pricing heuristic would be highly effective to optimize the company’s performance.

Lipman Bottle Company Annotated Bibliography

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Ghaemi, M. H. & Nematollahi, M. (2012). Study on the Behavior of Materials, Labor, and Overhead Costs in Manufacturing Companies listed in Tehran Stock Exchange. International Journal of Trade, Economics and Finance, 3(1), 19-24.

            The authors of this article examines the relationship between sales income and production expenses by analyzing income statements information for Tehran Stock Exchange listed companies over a period of four years ranging from 2000 to 2003 and subsequently evaluate costs stickiness. In this article costs stickiness is used to refer to a situation where increasing production activities result to faster increasing of costs compared to how decreasing production activities result to decreasing of costs.

The results of the study reported in this article show that overhead costs are sticky but direct labor costs as well as raw material costs are not sticky. This means effective management of overhead costs by production companies can significantly reduce operational costs hence directly influencing product prices as well as overall company profitability. Thus, Lipman Bottle Company can utilize the findings reported in this article to reduce its production costs, which is critical in eventually determining pricing, sale revenues and profits.

Lipman Bottle Company Annotated Bibliography

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Kimes, S. E. (2010). Strategic pricing through revenue management [Electronic version]. Retrieved [24th November 2015], from Cornell University, School of Hospitality Administration site: http://scholarship.sha.cornell.edu/articles/346

            The author of this article examines the importance of revenue management towards strategic pricing, especially in manufacturing industries where capacity of inventory is relatively fixed and cost of production is characterized by low variable costs and high fixed costs. This article reports that in industries where revenue management is used, revenue increases are typically reported. The insights provided in this article are highly applicable to Lipman Bottle Company where pricing of finished products can be strategically done through revenue management.

Bibliography

Aurora, B.-B. C. (2013). The Cost of Production under Direct Costing and Absorption Costing: A Comparative Approach. Annals of the “Constantin Brâncuşi” University of Târgu Jiu, Economy Series, 2, 123-129.

Banker, R. D. & Hansen, S. C. (2002). The Adequacy of Full-Cost-Based Pricing Heuristics. Journal of Management Accounting Research, 14, 33-58.

Ghaemi, M. H. & Nematollahi, M. (2012). Study on the Behavior of Materials, Labor, and Overhead Costs in Manufacturing Companies listed in Tehran Stock Exchange. International Journal of Trade, Economics and Finance, 3(1), 19-24.

Kimes, S. E. (2010). Strategic pricing through revenue management [Electronic version]. Retrieved [24th November 2015], from Cornell University, School of Hospitality Administration site: http://scholarship.sha.cornell.edu/articles/346

Lipman Bottle Company Annotated Bibliography

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