Product pricing – Knowsia

PM – May 2022 – L2 – SA – Q5 – Cost-Volume-Profit (CVP) Analysis

Analysis of Abayomi Plc's financial data to determine break-even sales and evaluate budget adjustments.

Question

Abayomi Plc produces and sells two major products, A and B. The budgeted income statement for the year to December 31, 2022 is given below:

The budgeted selling prices of the products are:

A: ₦120
B: ₦180

Required:
a. Determine the breakeven sales in units for each of the products, using the budgeted data. (6 Marks)

Now assume that the following changes are made to the budget:
(i) Unit selling price of product B is reduced to ₦160.
(ii) Direct material cost is expected to drop by 10% for product A and 20% for product B.
(iii) Direct labour costs for each product will increase by 10%.
(iv) Additional ₦456,000 will be spent on advertising.
(v) 80% of total revenue will be derived from product B.

Answer

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Tags: Break-even Sales, Cost Analysis, Product pricing, Profitability
Level: Level 2

Topic: Cost-Volume-Profit (CVP) Analysis
Series: MAY 2022

MA – May 2017 – L2 – Q3b – Decision making techniques

Describe the target costing process and outline possible steps to reduce a target cost gap.

Question

Wham Limited assembles and sells many types of android smartphones. It is considering extending its product range to include window phones. These smartphones produce better sound quality than traditional keypad phones and have a large number of potential additional features not possible with the previous technologies (station scanning, more choice, one-touch tuning, station identification text, and song identification text, etc.).

Android smartphones are produced by assembly workers assembling a variety of components. Production overheads are currently absorbed into product costs on an assembly labor hour basis. Wham Limited is considering a target costing approach for its new window phone product.

Required:

i) Briefly describe the target costing process that Wham Limited should undertake in order to successfully introduce its new window phone. (3 marks)

ii) Assuming a cost gap was identified in the process, outline possible steps Wham Limited could take to reduce the target cost gap. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost gap reduction, Cost Management, New product introduction, Product pricing, Target costing
Level: Level 2

Topic: Decision making techniques
Series: MAY 2017

PM – May 2022 – L2 – SA – Q5 – Cost-Volume-Profit (CVP) Analysis

Analysis of Abayomi Plc's financial data to determine break-even sales and evaluate budget adjustments.

Question

Abayomi Plc produces and sells two major products, A and B. The budgeted income statement for the year to December 31, 2022 is given below:

The budgeted selling prices of the products are:

A: ₦120
B: ₦180

Required:
a. Determine the breakeven sales in units for each of the products, using the budgeted data. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Break-even Sales, Cost Analysis, Product pricing, Profitability
Level: Level 2

Topic: Cost-Volume-Profit (CVP) Analysis
Series: MAY 2022

MA – May 2017 – L2 – Q3b – Decision making techniques

Describe the target costing process and outline possible steps to reduce a target cost gap.

Question

Required:

i) Briefly describe the target costing process that Wham Limited should undertake in order to successfully introduce its new window phone. (3 marks)

ii) Assuming a cost gap was identified in the process, outline possible steps Wham Limited could take to reduce the target cost gap. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost gap reduction, Cost Management, New product introduction, Product pricing, Target costing
Level: Level 2

Topic: Decision making techniques
Series: MAY 2017

Question Tag: Product pricing

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PM – May 2022 – L2 – SA – Q5 – Cost-Volume-Profit (CVP) Analysis

Analysis of Abayomi Plc's financial data to determine break-even sales and evaluate budget adjustments.

MA – May 2017 – L2 – Q3b – Decision making techniques

Describe the target costing process and outline possible steps to reduce a target cost gap.

PM – May 2022 – L2 – SA – Q5 – Cost-Volume-Profit (CVP) Analysis

Analysis of Abayomi Plc's financial data to determine break-even sales and evaluate budget adjustments.

MA – May 2017 – L2 – Q3b – Decision making techniques

Describe the target costing process and outline possible steps to reduce a target cost gap.

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PM – May 2022 – L2 – SA – Q5 – Cost-Volume-Profit (CVP) Analysis

Analysis of Abayomi Plc's financial data to determine break-even sales and evaluate budget adjustments.

You're reporting an error for "PM – May 2022 – L2 – SA – Q5 – Cost-Volume-Profit (CVP) Analysis"

MA – May 2017 – L2 – Q3b – Decision making techniques

Describe the target costing process and outline possible steps to reduce a target cost gap.

You're reporting an error for "MA – May 2017 – L2 – Q3b – Decision making techniques"

PM – May 2022 – L2 – SA – Q5 – Cost-Volume-Profit (CVP) Analysis

Analysis of Abayomi Plc's financial data to determine break-even sales and evaluate budget adjustments.

You're reporting an error for "PM – May 2022 – L2 – SA – Q5 – Cost-Volume-Profit (CVP) Analysis"

MA – May 2017 – L2 – Q3b – Decision making techniques

Describe the target costing process and outline possible steps to reduce a target cost gap.

You're reporting an error for "MA – May 2017 – L2 – Q3b – Decision making techniques"

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