In determining the price of a commodity, a cost/management accountant must rely on valid cost information so as to arrive at a price that will incorporate all the relevant costs. Not all costs that are involved in the production of a commodity will have a direct impact on the price of such commodity, it’s with this understanding that management rely on cost information in making pricing decisions.
Organizations need to decide the prices that are acceptable for their goods and services. However, sometimes the prices are determined by the market forces of demand and supply and thus a ...