14 Muna Enterprise produce and sells Shower Foam for nearby market. The business currently set selling price at production cost plus 40% profit margin. Miss Muna, an owner of the business plans to introduce new product, Bidara Shower Gel in the market. After conducting market research, she found that competitors sell similar product at RM45 per bottle. The following information relates to the production cost per bottle of a new product: Variable production cost Fixed production cost Variable selling and administrative expenses Fixed selling and administrative expenses RM20 RM10 RM5 RM8 Determine the cost gap that Muna Enterprise sholud close. A. RM30 B. RM27 C. RM18 D. RM3 15 Which of the following are key features of target costing? i. Cross functionality ii. Market price driven iii. Focus on customer value iv. Focus on utilization of firm's capacity A. i, ii and iii B. i, iii and iv C. i, ii and iv D. All of the given answers (2 marks) 16 Which of the following refers to the formula to determine the selling price using cost-plus pricing? A. Price = markup % x cost B. Price = cost / markup % C. Price = cost + (markup % x cost) D. Price = cost + (markup % + cost) (2 marks) 17 The following information relates to the production cost per unit of a product: Variable production cost RM200 Fixed production cost RM80 Variable selling and administrative expenses RM50 Fixed selling and administrative expenses RM75 What price must the company charge using cost-plus pricing based upon total costs and the markup percentage is 40%? A. B. C. D. RM392 RM132 RM350 RM567 (2 marks) 18 If there is excess capacity, the transfer price is often A. market price B. opportunity cost plus incremental cost C. variable cost or variable cost plus profit D. full cost plus profit (2 marks) 19 Transfer pricing is used in A. small centralized business B. an international companies only C. domestic firms only D. decentralized organisations (2 marks)