The Pricing Practices: Management Accounting Perspective

Sunarni, Christina Wiwik and Ambarriani, Anastasia Susty (2019) The Pricing Practices: Management Accounting Perspective. Review Integrative Business & Economics Research, 8 (2). pp. 84-97. ISSN 2304-10139

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Abstract

Management Accounting can be defined as management-oriented accounting or accounting in relation to management process. The management process describes the functions carried out by managers. At least, there are 3 (three) activities in management process: (1) Planning, (2) Controlling and (3) Decision making.Decision making is the process of choosing among competing alternatives. In decison making, management accounting provides information needed by managers. Determining a product's price or pricing decision is one of the common examples of short run decision making. The general rule of pricing from management accounting perspective is that price should be enough to cover all costs and generating satisfactory profit to oganization. The main focus of management accounting is to improve the organization’s performance and profitability by providing relevant information to managers. This research examined the practices of pricing in manufacturing firms throughout the Yogyakarta Region. The research’s samples were 52 manufacturing companies that consist of 33 medium-scale companies and 19 big-scale companies. This study tried to provide evidence on what was the main objectives of pricing, how a price was set, what factors were considered, and in what circumstances the price was changed. This research also tried to compare pricing practices in medium-scaled and big-scale companies also companies that only sell their product locally and sell their product globally. The research revealed that companies have more than one objective in setting their price. The main objective of pricing decison for big-scale companies was to maintain its market share, however the main objective for medium-scale was to achieve their target profit. The most important finding was that the main factor that influence the price was cost for all the samples. There was no difference between big and medium-scale companies on that point. Cost was also the most important factor that influenced the price changes for all samples. Another finding was that all samples believe the price changes will be not effective in increasing the sale volume.

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