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Which TWO of the following are reasons why cost-based approaches to transfer pricing are often used in practice?
A company has invested $500,000 in developing a new product and requires a return of 12% on this investment.
The company has researched the market and has set the selling price for the new product at $300 per unit. At this price, sales volume for next year is forecast to be 500 units. The forecast unit cost is $210.
What is the target cost gap per unit for the coming year?
Give your answer to the nearest whole $.
A company has just completed the production of the first 16 batches of a product. A learning curve has been observed throughout. The following table gives further details.
To the nearest whole percentage, what rate of learning is implied?
An organization uses a balanced scorecard approach to performance measurement, both at the corporate level and to assess the performance of each of its responsibility centre managers.
Which THREE of the following statements are valid in respect of the effect of this approach on the behavior of the responsibility centre managers?
K Supermarket spends $80,000 per year on checking and processing receipts of inventory. Annual warehouse costs are a further $70,000 per year. These costs are currently treated as fixed overheads in the company's costing system.
As an experiment, the company is preparing a direct profitability analysis of a small range of products, including fresh grapes.
K Supermarket receives a total of 3,600 deliveries every year. 20% of these deliveries are of perishable goods such as grapes. It takes twice as long to process a delivery of perishable goods compared to a normal delivery because perishable goods have to be checked more carefully.
Half of the warehouse costs are for the chilled store that is used to store perishable goods. At any time, the chilled store has 800 kilos of perishable goods in stock.
K Supermarket receives 150 deliveries of grapes every year. Each delivery is for 100 kilos of grapes. The grapes spend an average of two days in the chilled store before they are sold.
Calculate the total cost per kilo of checking, processing and storing grapes that should be taken into account in determining the profitability of grapes.
Give your answer to the nearest whole cent.
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