The use of job costing as a tool for the pricing and cost control decisions in the printing industry: the case of Société de Presse et d'Editions (SOPECAM)
par Christian Kuiate Sobngwi
University of Buea - Bachelor of Science 2003
The purpose of this study is to devise an objective basis for costing SOPECAM's printing works such as the newspaper Cameroon Tribune and also to set its selling price using the cost information obtained. The main difficulty will concern the allocation and application of the company overheads to the units of production. To perform this task in the right way, we need to have adopted an objective and appropriate costing method such as the job costing method that will help us in this task. The central problem of this study will therefore be to provide the SOPECAM management with reliable and accurate and scientific information about the unit cost of their main product so that they will be able to evaluate the performance of that product and also set a price that will reflect the real situation.
This study will be centred around three main research questions:
Ø How to apply job costing to the company processes?
Ø What are the factors that should be taken into account when costing the newspaper Cameroon Tribune?
Ø Finally, how could the results of job costing be used in the pricing and cost control processes?
This study has as a main objective, the determination of a reliable and precise figure for the unit cost of the newspaper Cameroon Tribune using job costing, so that the pricing process will be conducted on an accurate and objective basis.
The figure will be determined from two approaches: the Marginal and Absorption costing approaches to the job costing method.
Apart from the afore mentioned main objective, there are also objectives of smaller scope such as:
Ø Determining the right allocation bases for the company overheads.
Ø Measuring with great accuracy the amounts of raw materials, labour time and other costs to be used in the production of the newspaper.
Ø Finally, show the importance of a managerial and cost accounting department in a company.
The study being oriented towards the determination of a unit cost using two approaches to the job costing method, that is the marginal and absorption costing approaches, we will therefore be interested in the usefulness of each of these approaches to the pricing process and the company cost control programmes.
The first hypothesis of this study will then assume that any of these approaches can be used for both the pricing process and the cost control programmes without distinction; that is the mean unit cost will be the same for the two methods. This will be the «No difference hypothesis».
The second hypothesis, which is the «Alternative Hypothesis» states that the marginal approach is better for the cost control programmes while the absorption approach provides more accurate and reliable data for the pricing process.
By the end, the results of this study will guide us for the conclusion to adopt as far as these hypotheses are concerned and we will therefore know which of these approaches to use in each situation.