Scenario 1 You are working in the Finance department of Sandyfoot Ltd which manufactures a range of Sports Products. The current range comprises 75 different products and the company launches around 15 new products every year. Your manager has asked you to write a paper which addresses issues relating to pricing decisions for all the company’s products, with a particular focus on the prices set for the tennis racquets. The current approach used by the company is a cost based approach by which a predetermined percentage is added to the estimated full cost of the product. However the directors of the company have recently questioned this approach. You are required to discuss the following in your paper: 1.1 Explain the importance of cost information in the pricing decision 1.2 The advantages and limitations of the company’s current costing system 1.3 Propose alternative approaches to improve the costing and pricing systems used by Sandyfoot Ltd while the available options can be reduction of cost, increasing the sales price etc.
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