Answer to Question #154331 in Management for Prabhdeep

Question #154331

Discuss in detail the importance of product costing in price Estimation and profit management


1
Expert's answer
2021-01-13T05:51:27-0500

Product costing is the accounting process of determining all the business expenses incurred in the manufacture of company products. These costs include raw materials, labor, wages, and transportation.


A product's price is estimated after considering the cost of producing it and then adding a small mark up. The revenues of a company must exceed its expenses for it to be profitable, so most sales decisions have to be based on cost.


Product costing helps a firm make data-driven decisions which in the long run will translate to higher profits.


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