Objectives of this case study: • To review costing methods • To calculate the profitability of an incremental order using a full cost and a marginal cost approach • To understand the cost/volume/profit dynamics • To determine the break-even point of an incremental order • To review and measure the opportunity gains and costs of this additional order in a context of constraining capacity • To reengineer a cost structure according to a target costing approach • To understand strategic consequences of using a particular costing method. • To discuss the pricing issues in the context of a commodibcqty business : the paper industry.
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