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Practice questions

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Practice questions

Viewing 4 posts - 1 through 4 (of 4 total)
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  • November 3, 2015 at 11:06 pm #280398
    gabbi08
    Member
    • Topics: 135
    • Replies: 181
    • ☆☆☆

    Dear Mr Moffat

    I was doing the practice questions but I came across a for which I don t understand the answer provided. Could you please help.

    Question (Target costing)

    The selling price of product has been set at $300,00 per unit and at that price the company expect to sell 1000 units per year.
    The company requires a return of 20% pa on investment of $1,250,000 in the product.
    What is the target cost per unit?

    The correct answer is $250.

    Should $250 be the return on investment? 1,250,000*20%/1000?
    My answer was $50 (300-250)

    Could you please help?

    Thanks

    Gabriella

    November 4, 2015 at 8:01 am #280418
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54789
    • ☆☆☆☆☆

    You are correct.

    The answer does write that the target cost is $50, but the wrong letter has been typed by mistake. I will have it corrected. Sorry.

    November 4, 2015 at 8:31 am #280423
    gabbi08
    Member
    • Topics: 135
    • Replies: 181
    • ☆☆☆

    Dear Mr Moffat,

    thanks a lot for your response
    Have a nice day ahead

    Best Regards

    Gabriella

    November 4, 2015 at 1:29 pm #280457
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54789
    • ☆☆☆☆☆

    You too 🙂

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