A company was trying to market a new ‘caddy-shaped’ box PG Tips pyramid tea bags in 1997 when raw material costs rose and increased by over 60%. A company had to find a way to increase revenues, but they were afraid that their market shares would suffer if they raised their prices to retailers.

Management identified and solved the problem from a cross-functional view. The company analyzed the business functions of marketing, production, finance, and accounting, including the quality of the product and several different pricing and volume scenarios. The company predicted that rising costs of raw materials would make the competitors increase their prices. A company found that it would increase their revenue to cut costs in marketing and advertising the quality and value of their product without all of the promotional hype and expense, allowing them to maintain their consumer pricing and attract new customers. In contrast, as predicted, the competition increased prices and drove their customers to try Unilever’s new pyramid innovation at a less high price. The company strategically and methodically implemented the plan, gained over 600,000 new customers, and increased its market shares by more than 3.4 percent.

Required

What are three value strategies managerial accountants could exercise at major corporations with a high-level overview of the value driver and its outcome? What three cost accounting tools can accountants implement in the casestudy?

Answer rating: 100% (QA)

ANSWER The purpose of managerial accounting is to supply financial and nonfinancial information to the organizations management and other internal dec... View the full answer