Marginal cost analysis for decision making in industrial sector companies
DOI:
https://doi.org/10.18041/1900-0642/criteriolibre.2022v20n36.9079Keywords:
accounting and financial impact, marginal costs, MSMEsAbstract
The aim of this paper is to make an analysis of marginal costs for the industrial sector of Dosquebradas (Risaralda). It is developed to determine the incidence of marginal costs for business decision making; first, an economic analysis of marginal costs and their application in plant size investment decisions for an industrial sector is developed; likewise, an accounting and financial analysis of marginal costs is developed for their application at the firm level in sales price and break-even point decisions.
Regarding the design and method of the study, a sample of four companies of the analyzed sector, which reported information to DANE by the Annual Manufacturing Survey of 2020. The data were analyzed using Montecarlo Simulation and lineal regression under an explanatory methodology.
As findings, the overall data show the minimum marginal cost achieved is 103.3 million and the maximum value is 325.2 million, which is the marginal cost range that allows demand management and production capacity.
The research exposes limitations that reveal a path for the future. First, the work uses data from DANE as the only source of information. Second, the sample size by sector differ in size and this makes analysis difficult. Finally, executives are very suspicious of cost information and only one company agreed to provide specific information with summary reserve.
The results reveal practical implications for MSMEs owners and managers and offer insight into the influence of marginal cost in maintaining MSMEs competitiveness.
The contribution of this work lies in demonstrating the importance of marginal cost to support decision making in MSMEs and the underlying opportunity to improve competitiveness, through the application of analysis methods available for such business units, which, despite their potential, have been little applied in this business segment.
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