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The management of Demia Limited wishes to increase the level of contribution from sales of
televisions and to do so by adopting a target costing approach.Which TWO of the following would be techniques that Demia Limited could use to aim
towards achieving a target cost?? Use of bespoke components where possible
? Better training for unskilled workers
? Change in the packaging of the televisions
? Use of components with a longer lifespanThe answer is B and C.
B is right because it will improve efficiency and productivity in the organisation. And I am not sure about another one C. Won’t it affect the esteem value of the product by changing packaging material given the television is a high end retail product?B and C are the correct answers.
C is correct because they could look for cheaper ways of packing which would reduce the cost.
With regard to the esteemed value, I doubt anybody buying a TV will be particularly influenced by what the box looks like. In addition a lot of the packing will be internal packing. All that will really matter to the purchaser is that the packing is sufficient to protect the TV.(In addition, in the exam there is enormous time pressure, so this is a question where you could almost answer it by process of elimination even if you were not sure about C.
B is clearly correct, A and D are not correct. So it has to be B and C 🙂 )
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