In an attempt to win over key customers in the motor industry and increase itsmarket share, PP Motor Company plc have decided to charge a price lower thantheir normal price for component QQ12 when selling to key customers who are beingtargeted. Details of component QQ12's standard costs are as follows:Component QQ12Batch size 200 unitsMachine Machinegroup 1group 2££Machine Assemblygroup 3£Materials (per unit)Labour (per unit)Variable overheads (per unit)Fixed overheads (per unit)26.002.000.653.0017.003.001.600.722.5021.820.751.200.360.801.503.050.845.4031.65£10Setting up costs per batch of 200 units£6£4Required:|Compute the lowest selling price at which one batch of 200 units could be offeredand describe the four other factors to considerwhen adopting such a pricing policy.

Pricing Policy It is important for the entity to decide the best suitable pricing strategies to…

3 Materials (per unit) Labour (per unit) Variable overheads (per unit) Fixed overheads (per unit) 26.00 2.00 0.65 3.00 17.00 3.00 1.20 1.60 0.72 2.50 21.82 £6 0.75 0.80 1.50 3.05 0.36 0.84 5.40 31.65 £10 Setting up costs per batch of 200 units £4 Required:| Compute the lowest selling price at which one batch of 200 units could be offered and describe the four other factors to considerwhen adopting such a pricing policy.

3 Materials (per unit) Labour (per unit) Variable overheads (per unit) Fixed overheads (per unit) 26.00 2.00 0.65 3.00 17.00 3.00 1.20 1.60 0.72 2.50 21.82 £6 0.75 0.80 1.50 3.05 0.36 0.84 5.40 31.65 £10 Setting up costs per batch of 200 units £4 Required:| Compute the lowest selling price at which one batch of 200 units could be offered and describe the four other factors to considerwhen adopting such a pricing policy.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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