Question 1

An electric vehicle (EV) manufacturer is designing a new battery pack. The competitive market selling price is estimated at $50,000 per unit. The company requires a profit margin of 20% on the selling price. The current estimated production cost is $45,000 per unit.

Calculate the target cost gap per unit. (Enter numbers only)

Accepted Answer

1. Calculate the target profit. 2. Calculate the target cost (Selling Price - Target Profit). 3. Calculate the cost gap (Estimated Cost - Target Cost).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating 20% on cost instead of selling price, or confusing target cost with the cost gap.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 4

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