TABLE OF CONTENT
Executive Summary …………………………………………………………………...................2 1.0 Introduction …………………………………………………………………………………...3 2.1 Economic Theory ……………………………………………………………………………...3 2.2 Costs …………………………………………………………………………………………...5 2.3 Cost – plus Pricing …………………………………………………………………………….5 2.4 Production Mix Decision …………………………………………………………..................6 2.5 Target Costing …………………………………………………………………………………7
Conclusion …………………………………………………………………………….................8 2.0 The Role of Standard Costing …………………………………………………….................8 3.6 The Role of Variable Analysis ………………………………………………………………...9 3.7 The Values and Limitations of Variance Analysis …………………………………………..10
Conclusion ……………………………………………………………………………………….11 3.0 Advantages and Disadvantages of Introducing ABC System ………………………………11
Conclusion ………………………………………………………………………………………15
Recommendations ………………………………………………………………………………15
Appendix A - Elastic and Inelastic Demand ……………………………………………...........16
Appendix B - Summary of Variance Formulae …………………………………………...........17
Bibliography …………………………………………………………………………………….20

EXECUTIVE SUMMARY This report discusses the different models and concepts which could affect Manac’s pricing decisions and what we should consider when pricing. It also pays attention to the current standard costing approach adopted by the company together with Variance Analysis and the roles it plays in management accounting and how variance analysis contribute to overall profit. In efforts to improve profit levels it was decided to switch to ABC System and special attention is paid to the advantages and disadvantages.

1.0 Introduction
Manac plc, is a large company which manufactures and sells a range of standard electrical goods. It is a multinational company which has production and sales taking place across