Module 4 - SLP Budgeting, Variance Analysis, and Performance Evaluations Fourth and final part of the presentation. See background information for the module one SLP. Required: Make comments and suggestions on the following topics in your presentation.

Accounting Cost Systems and Cost Behavior

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7th November 2017

The new product in the market would be soap that caters to the needs of people who suffer from various skin conditions including eczema and acne, these two as the main skin conditions but also catering for the other skin conditions. The company can come up with a line of soaps that meet the customer’s needs and thus making them readily available to customers, given the fact that it is difficult to get the tailor-made kind of soaps for this group of people. Their skins react negatively to normal types or kinds of soap therefore, bringing about allergies and reactions that require visits to the dermatologist or skin specialist. A visit to the dermatologist is quite expensive, especially since each time a patient has to part with consultation fees for one to undergo treatment. To avoid such inconveniences, it would be much easier to have a go-to product that can easily be accessed, given the increase and improvement in availability to customers. It is a good way of bringing the products to customers (Schindler, 2012).

The line of soaps caters to the various skin conditions that people in different places suffer from. Presenting this line of soaps is a good way for the Skin Regimen Company to provide products that are available throughout the year as opposed to being available in season since the patients are greatly inconvenienced by this type of availability. At the same time, when the availability of soaps is off-season, some patients who go by the seasons are already used to this kind of working while a big percentage of patients are unaware of the seasonal approach and may need the products within short periods of time and in urgency. This company will have helped solved problems for a high percentage of patients who are, on normal days, affected by changes in the market. This line of soaps will also be more affordable as compared to those offered by other companies who take advantage of the fact that they are a monopoly when it comes to products that deal with skin conditions.

With regard to the cost estimates of the line of soap, the 90g bar will range between $0.96 and &1.16 depending on the functional use of the soap, with the least expensive bar of soap being for the skin conditions that can easily be treated and as the complexity of the condition increases, the price increases since there are more ingredients to the soap to help fight of the skin conditions and hopefully, give the conditions a permanent solution. The 113g bar will range between $1.25 and $1.40, using the same basis of the complexity of the skin condition on the table. The skin conditions could range from skin sores, skin ulcers, eczema, acne, psoriasis and even dermatitis, to mention but a few. Pricing will be done for every bar of soap, or with a slight reduction when three or five bars are sold as one package.

The selling price will be arrived at through adding the cost of producing the product to the markup (Selling Price = Cost + Markup). This is to mean that the selling price might reduce or increase based on the behavior of the market to enable affordability by the patients or customers while enabling the manufacturer or company to make its own profit in both cases. Since the production costs are not very high then it is important to avoid taking advantage of customers but still being able to make profit, for instance, in the case of selling price of $0.96, the cost can be estimated to be $0.40 plus other miscellaneous costs. The markup then becomes $0.50 for the realization of profit and income from which salaries can be paid. This is a pricing approach that takes into consideration all the stakeholders or players. These are the employees, customers, producers, wholesalers and retailers. The costs pertaining to all the stages the products go through are all taken into account (Steingold, 2017).

There is great potentiality in growth given that this group of people has not been given so much focus given the greater percentage of people who might not be undergoing the kind of suffering that they undergo. It is a good way of accessing income and profit seeing that it is an area not well discovered and developed, which means that customers will not have a problem spending more on such products to help deal with the skin conditions ailing them which then means that profits will definitely be realized.

References

Schindler, R. (2012). Pricing strategies: A marketing approach. Thousand Oaks, Calif: Sage Publications, Inc.

Steingold, F. S. (2017). The complete guide to selling a business. Nolo.