b) The company is also considering the launch of a new product, component TDX 489, and has provided you with the following information: Standard cost per box Variable cost 6,20 fixed cost 1,60 Total...

Extracted text: b) The company is also considering the launch of a new product, component TDX 489, and has provided you with the following information: Standard cost per box Variable cost 6,20 fixed cost 1,60 Total 7,80 Market research forecast of demand Selling price Demand box 13 12 11 10 5000 6000 7200 11200 13400 The company only has enough production capacity to make 7000 purchase product TDX 489 from a subcontractor at £7.75 per box for orders up to 5000 boxes and £7 per es. However, it would be possible to box if the orders exceed 5000 boxes. c) Prepare and present a computation which illustrates what price should be selected in order to maximize profits.


Extracted text: Question 2: Minimum selling price and optimum price from price-demand relationships. – BIL Motor Components Ltd The directors of XYZ Plc. have been analyzing the performance of one of its subsidiary companies BIL Motor Components Ltd. In an attempt to win over key customers in the motor industry and to increase its market share, BIL has decided to charge a price lower than its normal price for component TD463 when selling to the key customers who are being targeted. Details of component TD463's standard costs are as follows: Component TD463 Batch size 200 units Machine Machine Machine Assembly (£) Group 1 (£) Group 7 (£) Group 29 (£) Materials (per Unit) Labour (per Unit) Variable Overheads 0.65 (per Unit) Fixed Overheads 26.00 17.00 3.00 2.00 1.60 0.75 1.20 0.72 0.80 0.36 3.00 2.50 1.50 0.84 (per Unit) Total 31.65 21.82 3.05 5.40 Setting-up costs per batch of 200 Units £10.00 £6.00 £4.00 £0.00 Required: (a) Compute the lowest selling price at which one batch of 200 units could be offered, and critically evaluate the adoption of such a pricing policy. (b) The company is also considering the launch of a new product, component TDX 489, and has provided you with the following information: