Lipman Bottle Company Annotated Bibliography
following concepts when looking for appropriate resources:
�Variable cost per unit
�Direct labor costs
�Direct materials costs
�Cost based pricing
�Full costing
General guidelines for completing this assignment:
�You need to find at least three relevant and credible sources that can be used to support the concepts
discussed in the case (Three sources is the minimum; having only three will not get you the highest
grade.)
�The bibliography needs to be done as an APA formatted annotated bibliography. Please use the link
below to see how an annotated bibliography is formatted.
�Each cited source needs to be specifically linked to the concepts in the case. Please do not cite
random sources.
�Make sure your annotation captures the important point of the source. Please do not give a one-
sentence summary.
Aurora, B.-B. C. (2013). The Cost of Production under Direct Costing and Absorption Costing:
A Comparative Approach. Annals of the “Constantin Brâncuşi” University of Târgu Jiu,
Economy Series, 2, 123-129.
The author of this article stresses on the importance of managerial accounting with
regards to balancing production costs and pricing of finished products in a company’s
strategic management, especially to help managers in optimizing their decisions
particularly those concerning operating activities. The emphasis of the author is focused
on the role of managerial accounting in calculating costs (both fixed and variable),
measurement of inventory costs as well as prices and prices of services and products. As
a result, the system of cost calculation is prioritized in this article because it tends to vary
on basis of the type of costs assigned to items and according to the costing theory two
main systems of cost calculation adopted are: full cost accounting, which comprise of all
production costs, and partial cost accounting comprising of variable costs that vary with
output. Hence, considering that full as well as partial costing in production in terms of
fixed and variable costs play a crucial role in determining the prices of finished products,
this article provides valuable insights on how the balance between costing and pricing
can be effectively achieved. The author outlines a comparative approach with regards to
the differences between cost of production calculation under absorption costing and
direct costing. This article further examines the impact of utilizing each of these systems
of calculation on companies’ financial performance as well as financial position with
regards to reported income statement and financial position statement. This article
concludes by discussing the benefits of direct costing use in manufacturing companies for
their internal reporting, bearing in mind that this method of costing is unacceptable for
external reports that are presented to shareholders as well as other external uses.
However, direct costing method is very important for companies to appropriately make
production decisions. The article also fits very into Lipman Bottle Company case because
of the insightful information it can provide to the company management to solve its
production dilemma and settle on the most appropriate and profitable production mix
based on informed decisions.
Banker, R. D. & Hansen, S. C. (2002). The Adequacy of Full-Cost-Based Pricing Heuristics.
Journal of Management Accounting Research, 14, 33-58.
Authors of this article base their discussion on performance investigation of a full-cost
heuristic within a service setting focusing on costs involved in providing a service
eventually influence the pricing of such services. Based on the full-cost heuristic model,
authors of this article state that service companies periodically determines the extent of
capacity, prices as well as price discounts. In the context of price, the article examines a
scenario of a stochastic number of customers placing orders for a service and reports that
when in a certain period there are too many orders; a service company offers price
discounts to customers willing to come back for the same service later. The authors of
this article further examines how closely a company’s optimal performance can be
approximated using two heuristic approaches that are distinct such as full-cost pricing
heuristic and modified full-cost pricing heuristic. The results of the analysis full-cost
pricing is the best-performing heuristic when conducted upon a program towards firm’s
optimization on basis of constrained version in which prices are set using full costs in
addition to adjustments on basis of nonlinear elasticity demand. However, the article also
suggests that in settings where pricing choices and capacity choices are made before and
after demand information respectively, modified full-cost heuristic may be perform
relatively well but not for long before it starts to deviate. These pricing models are highly
applicable to the Lipman Bottle Company situation since the company needs to determine
it optimal performance by setting prices of products based on its capacity, full cost of
production and demand meaning that full-cost pricing heuristic would be highly effective
to optimize the company’s performance.
Ghaemi, M. H. & Nematollahi, M. (2012). Study on the Behavior of Materials, Labor, and
Overhead Costs in Manufacturing Companies listed in Tehran Stock Exchange.
International Journal of Trade, Economics and Finance, 3(1), 19-24.
The authors of this article examines the relationship between sales income and production
expenses by analyzing income statements information for Tehran Stock Exchange listed
companies over a period of four years ranging from 2000 to 2003 and subsequently
evaluate costs stickiness. In this article costs stickiness is used to refer to a situation
where increasing production activities result to faster increasing of costs compared to
how decreasing production activities result to decreasing of costs. The results of the study
reported in this article show that overhead costs are sticky but direct labor costs as well as
raw material costs are not sticky. This means effective management of overhead costs by
production companies can significantly reduce operational costs hence directly
influencing product prices as well as overall company profitability. Thus, Lipman Bottle
Company can utilize the findings reported in this article to reduce its production costs,
which is critical in eventually determining pricing, sale revenues and profits.
Kimes, S. E. (2010). Strategic pricing through revenue management [Electronic version].
Retrieved [24 th November 2015], from Cornell University, School of Hospitality
Administration site: http://scholarship.sha.cornell.edu/articles/346
The author of this article examines the importance of revenue management towards
strategic pricing, especially in manufacturing industries where capacity of inventory is
relatively fixed and cost of production is characterized by low variable costs and high
fixed costs. This article reports that in industries where revenue management is used,
revenue increases are typically reported. The insights provided in this article are highly
applicable to Lipman Bottle Company where pricing of finished products can be
strategically done through revenue management.
Bibliography
Aurora, B.-B. C. (2013). The Cost of Production under Direct Costing and Absorption Costing:
A Comparative Approach. Annals of the “Constantin Brâncuşi” University of Târgu Jiu,
Economy Series, 2, 123-129.
Banker, R. D. & Hansen, S. C. (2002). The Adequacy of Full-Cost-Based Pricing Heuristics.
Journal of Management Accounting Research, 14, 33-58.
Ghaemi, M. H. & Nematollahi, M. (2012). Study on the Behavior of Materials, Labor, and
Overhead Costs in Manufacturing Companies listed in Tehran Stock Exchange.
International Journal of Trade, Economics and Finance, 3(1), 19-24.
Kimes, S. E. (2010). Strategic pricing through revenue management [Electronic version].
Retrieved [24 th November 2015], from Cornell University, School of Hospitality
