Effect Of Overhead Cost On The Selling Price Of A Product

Effect Of Overhead Cost On The Selling Price Of A Product

Abstract

This write up bandy “ EFFECT OF OVERHEAD COST ON THE Dealing PRICE OF A PRODUCT ”. A case study of UNILEVER PLC. This exploration was carried out using colorful exploration styles similar as questionnaire and interview. Result from the applicable data collected are presented in irregular form and analysis made. All possible result and backing headed on the effect of overhead cost on the Selling Price of a product were bandied in the recommendation and conclusion.

Chapter One

Preface

In view of the cost of manufacturing which involves the conclusion of raw material to finish goods through the application of labour and overhead support, thus, the( 3) three introductory element of manufacturing cost are direct labour, direct material and product outflow. The selling price of a product bring the separation of cost into both manufacturing costs, which are useful at the stage of introducing period cost and product cost.

Tuned Aderibigbe( 1999) proves that in a retailing company, the cost of good vended during a given period is gain by conforming purchase during the period with the difference between, the ending and opening stock of goods. still, in the case of manufacturing company, the cost of good vended is attained by conforming the cost of good manufacturing during that period with the difference between the opening stock and the ending stock of finish goods. But, inorder to determine the cost of goods manufactured during that period, we must first of all acclimate the difference between the morning and the ending work in progress. So far, in an attempt to find the cost of a group of units of product, we do n’t have important problem because we can trace the product outflow cost as the part of the cost that are necessary for the product of similar product. Beside, the product stage of a company like “ UNLIEVER PLC ” relies on the quality, branding experience of its products and service independently for the sole determinant of its success or achievement of marketing pretensions.

Bell Martins( 1999) of marketing conception and strategy, where he assay pricing as a pivotal aspect of the trade appeal. Though, pricing is one of the significance of marketing blend. It must determine the price of a products as it’s obviously known that it’s the price charged by a company on it product that will determine if the product will succeed or fail and which can make the company records losses or profit. A company like “ UNILEVER PLC ”. Relies on the capability of its deals function for achievement of its marketing objects, where emphasis is heavily placed on deals operation issues. As far as I’m concern on the way toward the charging of overhead cost to the units, all overhead cost that are trace suitable to the colorful costs centers are first dealt with, that is, the process of charging to a cost center the outflow costs, arises solely because the cost must be incurred solely by the cost center. The effect of overhead costs of “ UNILEVER PLC ” on dealing price of a product could be attained through the circular material, timepiece cord payment for product workers who have spent their time on the conservation of outfit, along side with checks from suppliers and agencies for electricity bills, rents, rates and petrol among other particulars.

Statement Of The Problem

In this present time of poor frugality situation of the country, there has been a continuity race of poor friction on the cost of a product, which substantially was due to the lack of control. The primary motive of a establishment is to set a standard on its product inorder to achieve its thing and objects. therefore, the need for the satisfaction parameter to be enjoy by the society at large is that, any company that makes profit must be suitable to enjoy further people thereby satisfying an essential aspect of the societal need. Unfortunately, some association concentrate more on manufacturing as only the conversion of raw material to finished goods through the application of labour and outflow without paying important attention to the cost of good vended during a given period.

As some association face serious unfavourable returns, “ UNILEVER PLC ” is facing a serious profit squeeze. Hence, this design will dissect the effect of overhead cost control on the selling price of product, that could vastly enhance a company.

Ideal Of The Study

The end and ideal of this exploration work are

1. To know the conditioning involve in the physical charging of raw accoutrements to finish goods.

2. To identify the process of charging to cost center of a fair share of common item of cost.

3. To identify the factual outflow cost that can be trace directly to each cost center.

4. To know that the isolation of factual outflow and absorbed plant outflow is essential.

5. To know that the marketing deals and posterior services to the affair of a business is an essential part to be played on the selling price of a product.

Literal Background Of Lever Brothers NIG. PLC

Lever Brother Nigeria Plc, a leading company in the artificial sector is involved in the manufacturing and marketing of soap, cleaner, skin cream, tooth paste, squash drink, comestible canvases , and fats tea and coffee as well as range of petroleum jelly and other particular care product. The company was established in 1923, when its was incorporated as a private company under the name Lever Brother(W.A) Limited, in 1924, the name was latterly changed to West African Soap Company Limited and latterly Lever Brother Nigeria Limited in 1955, when the company went public in 1979, it latterly changed its name to Lever Brother Nigeria Limited. In compliance with the company and Allied matter degree 1990, the company substituted the word “ limited in the name of “ PLC ” to come Lever Brother Nigeria Plc. Inorder to insure sustained focus in operation, the company now has four manufacturing spots for its operation from the Original Six viz, Apapa the premier and largest point, produces detergents similar as Sunlights, Key; OxBar, Lux, Breeze, life and buy astral and some other particular products similar as tooth paste and Vaseline range. The alternate oldest point Aba is devoted to the product of non soapy cleansers, maquillages and bar conduct of non soapy soap, maquillages and bars, Third newest of shops, commissioned in 1983, is the ultral ultramodern food plant in Agbara, where the company produced Royco, Blue Band, Planta, Treetop, Oroyo and of course the fourth, the Oregun point where popular particular product Band like Elida Pears, Satin Sheen, Lotus etc are product. It’s intended to consolidate all the particular product product Toothpaste and Vaseline range at this point eventually. The end of the company is to lead by out core request of fast consumer product and achieve strong profitable growth by the stylish at relating and meeting consumers need through delivery of superior valued products. The ideal of the company is to bring in deportees who are willing and suitable to work in Nigeria and who’ll contribute as well as to help train Nigeria Lever Brother Nigeria Plc. Has been devoted to the product of top quality product/ brands for Nigeria for over Seventy times.

Significance Of The Study

It’s a common knowledge that when there’s smash, operation of ten employs lower of the overhead cost ways. They can go to incure further cost, as the effect of similar cost won’t be felt on the over each profit. still, in the period of depression operation frequently try to employ all the system of overhead cost to minimmnize cost benefit analysis of a product. This will further make the operation to employ effect cost of product ways so as to minimize the selling price of product.

Exploration Questions

1. How can the process of charging to cost center of a fair share of common item of cost can be identify.

2. How can we identify the factual outflow cost that can be trace directly to each cost center.

3. How essential is the isolation between the factual outflow and absorbed plant outflow.

4. What’s the part played on the selling price of a product by the marketing sates and posterior services to the affair of a business.

5. What are the exertion involved in the physical charging of raw material to finish goods.

Description Of Terms

– Outflow There are cost which aren’t part of high cost. It’s the addition of all circular cost.

-ADVERSE friction This do when the factual cost is lesser than the standard or calculated cost

– VALUE OF CHAIN This is all conditioning that are demanded to be carried out before a consumer entered the final product.

– PRODUCT STAGES This relies on the quality, branding, experience of its product and services for the sole determinant of its success.

– SELLING STAGES This relies on the capability of its deals function for the achievement of its marketing ideal where emphasis is heavily placed on deals operation issues.

– BUDGET This is a statement of planned conduct in financial terms indicating profit to be generated, expenditure to be incurred and capital particulars to achieve a given ideal for particular time or period.