Assume you work for a consultancy firm specialized in the provision of management accounting related services. You have been appointed to work on a new project that involves recommending pricing strategies for Nature Candle'ssenior management team.

It should be designed to recommend pricing strategies for Nature Candle's products, in consideration of its market position and external environment.

Nature Candle Limited is a medium-sized Australian- owned manufacturer of candles based in Richmond, Victoria. It specialises in the production of quality candles for the wholesale and retail markets. Following the "eco-friendly" value, Nature Candle Limited only produces candles made of natural ingredients, such as soy wax and beeswax, with cotton or linen wicks. Their customers range from household candle lovers to a broad range of corporate and boutique companies that are proud to put their labels on the customised candles.

The market of candles is traditionally dominated by paraffin candles made of paraffin wax - a petroleum by-product refined from crude oil that is also commonly used in beauty products. However, increasing research in recent years show that paraffin candles, particularly those with artificial scents and dyes, are potentially hazardous to users, causing damage to the brain, lung and central nerve system. Hence, more and more candle manufacturers turn their eyes to the eco-friendly candle segment. With its long-standing expertise in the design and production of high-quality soy wax and beeswax candles, unique ability to meet customer's individual needs and flexibility with specific requirements of different demanding markets, Nature Candle is able to compete with larger local manufacturers in the segment.

certain realities in Nature Candle's external environment:

In addition to the increasing competition with larger Australian candle manufacturers, the signing of free trade agreements, such as Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), has also opened the gate for candles, lower in price, manufactured in South East Asia. While Nature Candle traditionally does not compete with other players on price, the pressure of lower-priced imports on the eco-friendly candle market is being felt by the company.

The production of BW-18 beeswax candles ----MCT's best- selling product.

Exhibit 1 shows Conversion Cost Summary.~ Conversion Cost 100 unit BW-18 Months Spare Work for Other Summary Beeswax Candles Candle Production Division Present costing $ 2.097.50 $ 28.358.20 ~ $ 56,590.55 - Method 1st Proposed $ 2,519.77 - $ 39.484.18 ~ $ 78.170.18 - Costing Method Revised Proposed $ 1,434.45 + $ 18,559.74 ~ $ 37,509.25 - Costing Methode Table 3-1 Conversion Cost Summary