XYZ is a Belgian manufacturer of building tools with a broad product assortment and a diverse client base.  

Profitability is decreasing lately. XYZ currently works with an accounting system that is primarily designed for the purpose of preparing financial statements. You are hired to refine the (inadequate) accounting system of the company and to improve decision-making?

At the moment, you focus on customer profitability?

You are surprised to observe that price setting always happens by adding a 100% mark-up on top of the products' accounting cost:

 

Q1 Indicate why the current system of price setting is deficient?

 

Q2 Suggest concrete adaptations to the current costing system, which would enable XYZ to gain better insight into customer profitability?