Types of costing

General method of costing

Market based costing

Social costing

Input based costing

Costing and pricing

Is a costing technique where inputs are linked to outputs

In market based costing specific class is targeted for e.g 7up diet

The product which will be going to sell in the market create social positive impact or negative impact on the customers. This is positive or negative social costing

For example

The product used as a drug in the market is negative social costing

Costing and pricing are two different terminologies

Costing

Pricing

Price is the amount a customer is willing to pay for a product or service.

Cost is typically the expense incurred for a product or service being sold by a company.

Market based costing

Example

Designer dresses

Maria B. suit 1 Rs.26000. 1000 suits*26000= 26000000

The suit didn't cost Rs. 26000

Consumer psychology based costing

It doesn't need costing

Low cost

Low cost doesn't create social impact on elite class

Big brands do input based costing

The way the product is presented also matters

For example

If designer dresses sell outside their outlets people will not but them. They will buy them only from their outlets

Price

Costing+Profit-Taxes(optional)= Price

Universal Price

Equal price for all the target market

This is welfare

Competition based on two features

Competition on quality

Competition on price

People are price oriented

People are quality oriented

For e.g

People in Pakistan are price oriented

For e.g

People in America are quality oriented

We have to focus on both price and quality in our product

After calculating product cost we have to compare product quality features with the product cost

Welfare

For e.g

Mobile phones are expensive and cheap as well but the difference between them is the quality

Product will not generate society discrimination, product is for the welfare of people

For welfare the product cost should be low

The product is for welfare everyone can afford the product

Product based on anyone of the following

Welfare product

Profit maximization and welfare both

Profit maximization

Welfare

Certain % of profit should be given for welfare

For e.g

Edhi center

Product include both costing and pricing

Costing and pricing

Costing

Pricing

We do pricing for profit planning

We do costing for product

First do costing then do pricing

Through costing calculate cost then find per unit cost then add profit

To reduce cost increase quantity of the product