The Research On Inversion Between Cost And Price In Heating Enterprises In Jilin Province

Jilin Province is affected by location and climate. The heating period in winter isnearly half a year, so the heating supply has become an important work for affectingquality of life. At present, under the influence of coal, water, electricity and otherrising raw material prices, the heating cost is more and more increasing, the heatingcost is conflicted with price, furthermore, heating prices cannot compensate forheating costs, the final result is that heating cost is higher than the heating price, theheating cost hang upside down price, the profit is negative, the heating business lossesyear after year. In order to solve this problem, the government simply increase theheat price, however, heating industry is an infrastructure industry, heat price isadopted in principle to government pricing and guidance pricing, which is basicallyon the basis of the cost information reported by heating enterprises, there is no clearstandard, because of asymmetric information. The way of price adjustment is thelongitudinal comparison across the country, which result in bargaining. It is neitherscientific nor transparent. The behaviour of rising price is made heating enterprisesdissatisfied with the heat price and caused residents strongly opposed,.The customersthink why the users beared the higher heating cost and reacted with incomprehensionabout such practices. Therefore, in order to develop the heating industry better, andmaintain social stability and harmony, solving the problem that the heating cost hangupside down price has become the most important of all.The paper is based on the existing literature and the main object of study is theheating industry in Jilin Province. It investigates and studies thirteen companies’heating costs, heating prices as well as the main existing problems in Jilin Provincefrom2010to2013, confirmes the existence relationship of inversion between cost andprice in Jilin Province and studied the reasons and offered relative treasures based onthe causes, In order to solve the problem better, it uses activity based costing to definethe cost price, made the cost price more reasonable and transparent and provides thereference for the cost by government. This paper analyses mainly from the following four aspects. Firstly, the content of heating cost; secondly, inversion situation in Jilinprovince between heating cost and price; thirdly, inversion causes in Jilin provincebetween heating cost and price; fourthly, inversion problem solution in Jilin provincebetween heating cost and price.The research on inversion between cost and price in Jilin Province can define theheating cost price clearly, made the heating cost price reasonable and transparent andrealized the reasonable ratio of heating costs and prices. In large part, it improved thetheory of heating largely and offered the theoretical reference for follow-up study onthe heating cost price as well as public utility price. The study and anlysis oninversion between heating cost and price can provide the help for Academic research,offer the policy for the heating cost price by government and give the strongtheoretical support for the price by government. It is not only the future problem butalso livelihood issues. Only we deal with this problem, we can create efficientoperation mechanism for heating enterprises, provide a reasonable price guarantee forthe residents and more realize social harmony and stability.