a) Briefly describe each of the following:

1. Customer Profitability analysis
2. Target Costing
3. Price Skimming

b) Windle Limited manufactures a number of products at its factory in Cork. Windle Ltd. has budgeted to make 70,000 units of one product, the SP. The variable cost of a single unit of the SP is 9.00 and annual fixed manufacturing costs are expected to be 170,000.

The financial controller of Windle Limited recommends that a selling price of 160% of variable manufacturing cost should be charged for every unit of SP sold.

The marketing director has recommended that the product be subject to a mark up of 25% on full manufacturing cost.

The sales director feels both suggestions are too simplistic and has produced the following estimates of sales demand for the SP:

Price per unit	Demand (units)
12	95,000
14	72,000
16	55,000
17	48,000
18	40,000

Windle Limited has sufficient capacity to make 100,000 units and fixed manufacturing costs will remain constant at all levels of demand.

Required:

1. Calculate the selling price per unit and total profit for the year based on the Financial Controllers suggestion.
2. Calculate the selling price per unit and total profit for the year based on the Marketing Directors suggestion.
3. Consider the information provided by the Sales Director. Calculate the total profit earned at each selling price and select the selling price that should be charged to maximise profit.