Allocation of selling, general and administrative expenses for pricing and customer profitability measurement - Case: Finnish forest industry company

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dc.contributor Aalto-yliopisto fi
dc.contributor Aalto University en Terävä, Olli-Pekka 2016-06-14T06:01:09Z 2016-06-14T06:01:09Z 2016
dc.description.abstract The topic of this thesis addresses the allocation of selling, general and administrative (SG&A) expenses to cost objects regarding pricing and customer profitability measurement in a large Finnish forest industry company. The topic is interesting and constantly relevant regarding the profitability of companies and their customers that derive from the pricing decisions companies make in order to cover bottom line overhead and customer-specific costs. In addition, the ability to identify costs related to a customer relationship can be emphasized in customer profitability measurement. This thesis approaches the topic through the following research questions: 1) how have the company SG&A expenses been taken into account in customer profitability measurement, 2) how have the company SG&A expenses been taken into account in pricing decisions and 3) how should the case company SG&A expenses be taken into account in customer profitability measurement and pricing decisions. The study was conducted as a qualitative case study in the case company as a part of a product costing project. One goal of the project was to harmonize the allocation rules of SG&A expenses. The empirical evidence is based on the interviews with selected case company representatives and documented numerical data derived from the case company ERP systems. The case company operates on a highly competitive market, and therefore there is always a market price for the case company's products. As a price-taker, the case company does not price its products on a cost basis but rather aims at achieving a target selling price and a target contribution margin that are expected to provide a sufficient contribution also to non-manufacturing overhead expenses. The business is based on high sales volumes and a significant number of highly profitable customers. Therefore, there has not been imminent need for the ability to monitor the profitability of individual customers or the related customer-specific costs, also partly due to the small proportion of SG&A expenses. Regarding pricing decisions, the options for the case company are limited due to the nature of the business but, regarding the objective to harmonize the SG&A cost allocation practices, it can be expected that the company may in the future be able to analyze customer profitability accurately at the customer margin, compared to the previous contribution margin level analysis. The findings of this thesis cannot be widely generalized due to the limitations related to single case studies. The findings, however, provide a good basis for more extensive research on forest industry business regarding customer profitability and pricing issues. en
dc.format.extent 78
dc.language.iso en en
dc.title Allocation of selling, general and administrative expenses for pricing and customer profitability measurement - Case: Finnish forest industry company en
dc.type G2 Pro gradu, diplomityö fi Kauppakorkeakoulu fi School of Business en
dc.contributor.department Laskentatoimen laitos fi
dc.contributor.department Department of Accounting en
dc.subject.keyword SG&A
dc.subject.keyword overhead
dc.subject.keyword allocation
dc.subject.keyword pricing
dc.subject.keyword customer profitability
dc.identifier.urn URN:NBN:fi:aalto-201609083461
dc.type.dcmitype text en
dc.programme.major Laskentatoimi fi
dc.programme.major Accounting en
dc.type.ontasot Pro gradu tutkielma fi
dc.type.ontasot Master's thesis en
dc.subject.helecon laskentatoimi
dc.subject.helecon accounting
dc.subject.helecon hinnoittelu
dc.subject.helecon pricing
dc.subject.helecon asiakashallinta
dc.subject.helecon customer relationship management
dc.subject.helecon asiakkaat
dc.subject.helecon customers
dc.subject.helecon arviointi
dc.subject.helecon evaluation
dc.subject.helecon metsäteollisuus
dc.subject.helecon forest industry
dc.ethesisid 14426 2016-05-19
dc.location P1 I

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