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Target costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Target costing

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • May 23, 2021 at 7:18 pm #621552
    Shi2004
    Participant
    • Topics: 79
    • Replies: 33
    • ☆☆

    Direct material cost (bought in parts) $40
    Direct material cost : all of the parts currently proposed for the webcam are bespoke parts. However most of these can actually be replaced with standard parts costing 55%less.
    However 3 if bespoke parts which currently account for 20% of the estimated direct material cost cannot be replaced although an alternative supplier charging 10% less has been sourced for these parts.
    What is the direct material cost per unit in light of new information?
    Its a bit of confusion this question about the replaced part and not replaced part. Im not understanding. Pls explain sir

    May 24, 2021 at 6:48 am #621575
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The bespoke parts currently cost 20% x $40 = $8 and will be replaced and so will cost $8 less 10%.

    The other parts currently cost 80% x $40 = $32 and will be replaced and so will cost 55% less.

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