ExpertEasy2 marksShort Answer
ACCA · Question 02 · Specialist cost and management accounting techniques
Section A
NeuroTech is a startup developing a new brain-computer interface headset. The estimated selling price is $850. The company requires a profit margin of 30% on the selling price. The current estimated cost to produce one headset is $640.
What is the target cost gap per headset? (Enter your answer as a whole number, without the $ sign).
Section A
NeuroTech is a startup developing a new brain-computer interface headset. The estimated selling price is $850. The company requires a profit margin of 30% on the selling price. The current estimated cost to produce one headset is $640.
What is the target cost gap per headset? (Enter your answer as a whole number, without the $ sign).
How to approach this question
1. Calculate the required profit: 30% of $850. 2. Calculate the target cost: Selling Price - Required Profit. 3. Calculate the cost gap: Estimated Cost - Target Cost.
Full Answer
Required Profit = 30% * $850 = $255.
Target Cost = $850 - $255 = $595.
Cost Gap = Current Estimated Cost ($640) - Target Cost ($595) = $45.
Common mistakes
Calculating the 30% margin on the cost instead of the selling price.
Practice the full ACCA PM — Performance Management Practice Exam 2
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