Nestle Cost Accounting: Pricing Strategies and Financial Analysis

This case study provides an analysis of Nestle Corporation Limited's cost accounting practices, focusing on primary and secondary data sources for costing. It examines Nestle's pricing strategies, including skimming/penetration pricing, value-based pricing, competitor-based pricing, and cost-based pricing, using a research design that involves questionnaires, interviews, and surveys conducted in Bulgaria. The study highlights the importance of effective cost accounting for management, investors, and consumers, and discusses the calculation of unit costs, different types of costs (fixed and variable), and the components of a master budget, including operating, cash, static, financial, program, flexible, and capital expenditure budgets. The findings aid Nestle in making informed financial decisions, developing appropriate pricing strategies, and accurately evaluating pricing determinants, ultimately guiding the company in its budgeting processes. This document is a student contribution to Desklib, a platform offering study tools and resources.

N E S T L E C O R P O R AT I O N L I M I T E D
COST ACCOUNTING

Primary and Secondary Sources of Costing Data
Primary sources- material purchase records,
labor salaries and wages records, energy bills
records
Secondary sources- Material overheads, costs
of production records, production overhead
cost records.

Nestle Pricing Strategy Study
Nestle conducted the study to find out about
how customers perceive the pricing of their
products.
Bulgaria was selected the study.

Data Collection
Both primary data and secondary data were
collected in this research. The following
methods were used in collecting the data.
Interviews
Questionnaires
Surveys
Customer feedback

Pricing
Nestle corporation limited uses five different
pricing strategies including;
Skimming/penetration pricing
Value-based pricing
Competitor-based pricing
Cost based-pricing

Research Design for Nestle Corporation Limited
The company issued descriptive
questionnaires to the sample market
selected.

Participants
A section of the customers in Bulgaria was
selected for the research
60 people sample was selected to represent
the 1200 Nestle customers in Bulgaria.

Sample Design For Nestle Research
The participants of the research were
selected randomly from customers of
different stores of Nestle in Bulgaria.
The 60 people sample represented 5 percent
of the total Nestle customers in Bulgaria.

Example of the Sample Structure
Store Number of
customers
Sample Ratio Number
selected
1 480 0.05 24
2 300 0.05 15
3 420 0.05 21
Total 1200 0.05 60

Data collection
Primary data were collected using
questionnaires which the researcher
delivered.
The questionnaires basically interviewed on
the customer's perceptions concerning
Nestlé's products.

Data Analysis
The data collected were represented in
tables, and graphs so that they could be
interpreted and explained.

Findings
Most of the customers in new markets
wanted the prices to be special.
Customers in the existing markets preferred
competitive pricing.
Significant percentage of customers were
willing to pay for high quality products
despite high prices.