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The estimated Cost level is $ 120 and the Target cost for a Product ‘X’ is $ 100.
The following are the cost break-up for the current estimated cost level
Material Cost: $45 (the company may use material of ‘P’ quality which will cost $30, the same material is being utilized by other competitors in the market)
Salaries Cost: $25
Overheads: $20 (of which $5 are to enhance the product design to make it superior than the product offered by the competitor)
Distribution Cost: $20
Packaging Cost: $10
Calculate the best Target Cost for Product ‘X’ after reducing the Cost Gap.Please help to solve, i am confused that 5$ that engance the product ,will it be added or deducted from overhead? Kindly solve that woul be great help.
Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers. They have answers and explanations.
The $20 already includes the $5 to enhance the product design and so this would need subtracting from the cost.
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