Question 1

**Section B - Case 1: VoltCell Manufacturing**

VoltCell is a heavy manufacturing and tech company that produces advanced solid-state batteries for electric vehicles. The company is evaluating a new battery model, the 'QuantumCell', which has an expected life cycle of 4 years.

The estimated costs over the life cycle are as follows:
- Research and Development: $4,500,000
- Product Design and Testing: $1,500,000
- Manufacturing costs: $250 per unit
- Marketing and Distribution: $2,000,000 total over 4 years
- End-of-life recycling and disposal costs: $1,000,000

VoltCell expects to produce and sell a total of 100,000 units of the QuantumCell over its 4-year life cycle.

Calculate the total life cycle cost per unit for the QuantumCell. (Enter the numerical value only)

Accepted Answer

1. Sum all the fixed/total costs over the life cycle (R&D, Design, Marketing, End-of-life). 
2. Divide this total by the expected total volume (100,000 units) to find the fixed cost per unit. 
3. Add the variable manufacturing cost per unit ($250).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to include end-of-life costs, or only calculating the manufacturing cost.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 4

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