If the demand for a product is 5,000 units when the price is $400 and 6,000 units when price is $380, what is the optimal price to be charged in order to maximise profit if the variable cost of the product is $200?
The following price and demand combinations have been given:
P1 = 400, Q1 = 5,000
P2 = 380, Q2 = 5,500
The variable cost is a constant $80 per unit and fixed costs are $600,000 pa.
What is the demand function?
Cost-based approaches to pricing take more account of the external environment than target costing.
The following information is relevant for questions 20.4 and 20.5.
A is a sole trader who does not keep full accounting records. The following details relate to her transactions with credit
customers and suppliers for the year ended 30 November 20X3.
$
Trade receivables, 1 December 20X2 130,000
Trade payables, 1 December 20X2 60,000
Cash received from customers 686,400
Cash paid to suppliers 302,800
Discounts allowed 1,400
Discounts received 2,960
Irrecoverable debts 4,160
Amount due from a customer who is also a supplier offset against an amount due
for goods supplied by him 2,000
Trade receivables, 30 November 20X3 181,000
Trade payables, 30 November 20X3 84,000
Based on the above information, what figure should appear in A's statement of profit or loss for the year ended 30
November 20X3 for sales revenue?
Pricing based on mark-up per unit of limiting factor is particularly useful if an organisation is not working to full capacity.
Based on the above information, what figure should appear in A's statement of profit or loss for the year ended 30 November
20X3 for purchases?
A company currently sells a product for $40 and at this price, demand is 16,000 units per month. It has been estimated that for every $3 increase or reduction in the price, monthly demand will fall or increase by 2,000 units.
What is the formula for the demand curve for this product?
A sole trader fixes her prices by adding 50 per cent to the cost of all goods purchased. On 31 October 20X3 a fire destroyed a considerable part of the inventory and all inventory records.Her trading account for the year ended 31 October 20X3 included
the following figures:
Sales $ $
Opening inventory at cost 183.600 281,250
Purchases 249,200
Closing inventory at cost 432,800 228,200
Gross profit 204.600 53,050
Using this information, what inventory loss has occurred?
Which of the following pricing policies is the most appropriate for a new product for which the price elasticity of demand is expected to be inelastic?
A fire on 30 September 20X2 destroyed some of a company's inventory and its inventory records. The following information is available: $
Inventory 1 September 20X2 318.000
Sales for September 20X2 612.000
Purchases for September 20X2 412.000
Inventory in good condition at 30 September 20X2 214.000
Standard gross profit percentage on sales is 25%
Based on this information, what is the value of the inventory lost?