Pricing: Is management accounting information essential for the survival of small-scale producers?
Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
While the large organisations have always used management accounting information as a tool of control and a base for decision-making, small firms have struggled to survive on assumptions, which in most cases are unreliable. The purpose of this case study has been to find out how small firms in the category of sole traders (egenföretagare eller enskilda näringsidkare), without limited liability make pricing decisions and if they can benefit from management accounting information. This case study gives evidence that management accounting information is a necessity in small firms as much as it is in big organisations. The key issues that should be taken into consideration when setting prices are costs of production, competition and customer expectations. Because production costs set a minimum limit on the price that a firm will charge without incurring a loss, it is important that they are calculated approximately. Without the necessary information, small firms often fail to identify costs and as a result they may set prices too low to cover the anticipated contributions. Therefore, management accounting information is vital for the survival of small firms, at least in the process of identifying and measuring costs.
Place, publisher, year, edition, pages
IdentifiersURN: urn:nbn:se:su:diva-5767OAI: oai:DiVA.org:su-5767DiVA: diva2:195652