Medrana, Meilin Denise D.

AIS2B
FORMATIVE 4

1. What mix of products should be produced?

Every business needs to develop their own marketing mix in order for them to sell and
capture the attention of their consumers. In marketing strategy, there are 4P’s and these
include: place, promotion, price, and product. An entity deals with what type of product mix
should be produced in their process. This mix of products is known as product assortment. It
refers to the type and total quantity of product lines a business offers to its consumers.
Basically, it has four (4) dimensions including length, width, depth, and consistency. For length,
it is the total number of items and products being produced. Meanwhile, width is considered as
the number of product lines a business has. For the depth, this is the distinction and variations
of different products. These include the color, size, flavor, shape, and etc. It can also be a mix of
non-edible goods and edible goods. Marketing strategy is used every business/company to
further promote themselves and compete in this evolving industry.

If one wants to establish a business, he/she must think of the type of product he/she
wants to sell in the market. There is a wide variety of goods that can possibly be sold in the
market and it all boils down to product classification. But what kind of products are being
produced? They are classified into three (3) tangible products, intangible products, and
services. Tangible products are items that can be physically touched and consumed. Intangible
products are those products which have no physical presence but are felt indirectly. An example
of this are online software and programs. These are the kind of products that are produced in
this industry and are still developing as of today.

2. How should products be priced?

In my perspective, products should be priced based on the materials used as well as the
cost of labor. Manufacturers need to guarantee that materials are ought to be of high quality and
hygiene in order for them to set a price that is suitable because they need to make sure that the
consumers are willing to purchase them. There are set of ways on how to price your product.
First is to know your market. A company must first distinguish the customers who are capable
and willing to pay the product based off on the company and that against other competitors. A
business can use a common technique which is the cost-plus pricing. This is where they add all
the cost of the product and adding a mark-up. Mark-ups are essential because these are
considered the real earnings.

In cost accounting, it should include all direct costs, variable costs, as well as
accomplishing the percentage of the fixed costs. Another technique in pricing is to use the
value-based pricing. This is setting a price based on how much trust the customers are placing
and knowing the worth of the product. Products should not be overpriced nor underpriced solely
based on the products a manufacturer uses. In addition, price skimming is also a considered
strategy in pricing because its way is to set a high price and lowering it once a company is
evolving or vice versa which is the penetration pricing which sets a lower price just so they can
enter the corporate world, compete, and setting it on a lower price once they have accomplished
it.

3. How should resources be allocated?

Allocation is needed inside the business because this will create financial information
about the business activities and help investors and stakeholders determine the financial status
of a company’s operation. Historical data is used and should be transparent to compare this
from one company to another. This will result in making effective decision-making by both
internal and external users of the business. But how are these resources allocated? Resource
allocation is the process of assigning resources and products to their corresponding areas.
There are six ways for a proper resource allocation. These are to divide the project into tasks,
assign the resources, determine resource attributes, resource leveling, re-allocate as
necessary, and track resource utilization.

First off is to divide the project into tasks. The company should segregate who and what
should be done to these certain projects. Once the projects are divided, we assign the
resources. Each task should have the right corresponding resources in order to be performed
right. From work labor, raw materials, equipment, facilities, and other miscellaneous materials.
Next is to determine the resource attributes. These attributes include grade, skills, quality, size,
shape, color and availability. After this is done, we move over to resources leveling. Resource
leveling is the process of examining the resources to make sure that it is working and has no
defects so we can work over the ones that should be relocated properly. Inside a business
entity, there tend to be inescapable functions about resource allocation that the operations
manager has to deal with. Resources can reach a deficit. They sometimes lose their usefulness
in time. Problems are inevitable so that requires a shift of resources from one task to another, or
a change in the project schedule or budget. Lastly, is to track resource utilization rates. In
conclusion, the significance of resource allocation is to present factual financial information in
smart decision-making.

4. How should costs be managed and performance evaluated?

It all goes back to the meaning of cost accounting that aims to record and classify costs
which allows managers to control processes and activities happening in the business. This is
where managerial accountants serve as a controller because one of the most important yet
difficult tasks of a managerial accountant is to determine the products, services, customers, and
other items of interest to managers. Thus, managerial accountants need to learn the basic
definition of what costs are and what ways should costs be used in making decisions for small
business enterprises and large businesses that are prevalent in the industry. Cost is the amount
of cash and cash equivalent sacrificed for goods and/or services that are expected to bring a
current or future benefit to the organization. These includes the direct and indirect costs. Costs
should be managed by accumulating and assigning costs. Accumulating costs is the approach
wherein costs are measured and recorded. It tells the company what was spent and it further
suggests on how these costs were assigned to cost objects. While on the other hand, assigning
costs is the way that a cost is linked to some cost object.