b) The company is also considering the launch of a new product, component TDX 489, and has provided youwith the following information:Standardcost per boxVariable cost6,20fixed cost1,60Total7,80Market research forecast of demandSelling priceDemand box131211105000600072001120013400The company only has enough production capacity to make 7000purchase product TDX 489 from a subcontractor at £7.75 per box for orders up to 5000 boxes and £7 peres. However, it would be possible tobox if the orders exceed 5000 boxes.c) Prepare and present a computation which illustrates what price should be selected in order to maximizeprofits. Question 2: Minimum selling price and optimum price from price-demand relationships. –BIL Motor Components LtdThe directors of XYZ Plc. have been analyzing the performance of one of its subsidiarycompanies BIL Motor Components Ltd. In an attempt to win over key customers in themotor industry and to increase its market share, BIL has decided to charge a price lowerthan its normal price for component TD463 when selling to the key customers who arebeing targeted. Details of component TD463's standard costs are as follows:Component TD463 Batch size 200 unitsMachineMachineMachineAssembly (£)Group 1 (£)Group 7 (£)Group 29 (£)Materials (perUnit)Labour (per Unit)Variable Overheads 0.65(per Unit)Fixed Overheads26.0017.003.002.001.600.751.200.720.800.363.002.501.500.84(per Unit)Total31.6521.823.055.40Setting-up costsper batch of 200Units£10.00£6.00£4.00£0.00Required:(a) Compute the lowest selling price at which one batch of 200 units could be offered,and critically evaluate the adoption of such a pricing policy.(b) The company is also considering the launch of a new product, component TDX 489,and has provided you with the following information:

Fixed Cost are the cost which is fixed in nature and can not vary with increase or decrease in…

) The company is also considering the launch of a new product, component TDX 489, and has provided you vith the following information: Standard cost per box 6,20 1,60 7,80 'ariable cost ixed cost otal Market research forecast of demand elling price 13 12 11 10 Demand box he company only has enough production capacity to make 7000 boxes. However, it would be possible to 5000 6000 7200 11200 13400

) The company is also considering the launch of a new product, component TDX 489, and has provided you vith the following information: Standard cost per box 6,20 1,60 7,80 'ariable cost ixed cost otal Market research forecast of demand elling price 13 12 11 10 Demand box he company only has enough production capacity to make 7000 boxes. However, it would be possible to 5000 6000 7200 11200 13400

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.4E

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