ACCA · Question 18 · Specialist cost and management accounting techniques
Section B - Case 1: AeroDrone Tech
AeroDrone Tech is an agricultural technology startup developing the 'AgriScout', a drone designed to monitor crop health. Market research indicates that large-scale farms would be willing to pay $1,200 for such a drone. AeroDrone's investors require a profit margin of 20% on the selling price. The current estimated production cost of the AgriScout is $1,050.
Which TWO of the following actions would be appropriate methods for AeroDrone to close the cost gap?
Answer options:
Increasing the selling price to $1,312.50 to maintain the 20% margin.
Utilizing standard components instead of custom-designed parts.
Conducting value analysis to remove features that customers do not value highly.
Reducing the required profit margin to 12.5%.
32 questions · hints · full answers · grading
Expert