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    PracticeACCAACCA PM — Performance Management Practice Exam 4Question 18
    Easy2 marksMultiple Choice
    Decision-making techniquesPricing StrategiesSection B
    This question is part of a case study — click to read the full scenario(Case 16)

    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)

    View full case study page →

    ACCA · Question 18 · Decision-making techniques

    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.

    VoltCell is considering its pricing strategy for the launch of the QuantumCell. The battery represents a significant technological breakthrough, has no direct competitors currently, and appeals to early adopters in the luxury EV market.

    Which pricing strategy is most appropriate for the launch of the QuantumCell?

    Answer options:

    A.

    Market penetration pricing

    B.

    Market skimming pricing

    C.

    Marginal cost pricing

    D.

    Loss leader pricing

    How to approach this question

    Match the characteristics of the product (innovative, no competitors, luxury market, high R&D) to the correct pricing strategy.

    Full Answer

    B.Market skimming pricing✓ Correct
    Market skimming involves setting a high initial price to 'skim' the maximum revenue from early adopters who are willing to pay a premium for new technology. It is highly appropriate for innovative products with heavy R&D costs, short life cycles, and no immediate competition.

    Common mistakes

    Confusing skimming with penetration pricing.
    Question 17All questionsQuestion 19

    Practice the full ACCA PM — Performance Management Practice Exam 4

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