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Kauppakorkeakoulun julkaisuportaali
Aalto-yliopiston kauppakorkeakoulun gradujen tiedot nyt Aaltodocissa: Aaltodoc-julkaisuarkisto
Kauppakorkeakoulu | Laskentatoimen laitos | Laskentatoimi | 2016
Tutkielman numero: 14426
Allocation of selling, general and administrative expenses for pricing and customer profitability measurement - Case: Finnish forest industry company
Tekijä: Terävä, Olli-Pekka
Otsikko: Allocation of selling, general and administrative expenses for pricing and customer profitability measurement - Case: Finnish forest industry company
Vuosi: 2016  Kieli: eng
Laitos: Laskentatoimen laitos
Aine: Laskentatoimi
Asiasanat: laskentatoimi; accounting; hinnoittelu; pricing; asiakashallinta; customer relationship management; asiakkaat; customers; arviointi; evaluation; metsäteollisuus; forest industry
Sivumäärä: 78
Avainsanat: SG&A; overhead; allocation; pricing; customer profitability
Tiivistelmä:
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.
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